I. Introduction

Bitcoin is often praised as a long-term savings technology, but its role as a medium of exchange is just as important—especially for businesses. From local cafés to large corporations, more merchants are considering bitcoin as a payment option, drawn by its low fees, fast transactions, and ability to reach a global, young and tech savvy customer base.

This guide explores how local businesses can start accepting bitcoin, covering both the immediate benefits and long-term strategic advantages. As digital payments evolve, understanding Bitcoin’s potential isn’t just an option—it’s becoming essential for businesses looking to stay ahead.

II. Benefits of Accepting Bitcoin for Small Businesses

There are three main reasons for a small business to accept bitcoin:

1. Grow revenue from energetic, tech-savvy, and potentially hugely loyal customers. Bitcoiners are often delighted to pay and tip in bitcoin, and they regularly travel far and wide just to visit and support local businesses that accept bitcoin.
2. Save on fees: Fees for bitcoin payments are low and paid by the customers, so merchants can save 2-3% in credit card fees by simply accepting payments on one of Bitcoin’s second layers (e.g., Lightning or Liquid).
3. Preserve value: Bitcoin serves as a long-term solution to inflation, preserving the value of earnings due to its fixed supply. While the bitcoin price is volatile in the short term, over a number of years this volatility has been up more than down, driving the price higher. 

Some other benefits include:

4. Banks are not needed: Bitcoin provides a global, decentralized banking solution, enabling secure and affordable transactions for everyone, anywhere, anytime.
5. Instant settlement — no risk of chargebacks: On Bitcoin, settlements are final, which means that charges cannot be reversed. Online commerce now comes with guarantees for the business.
6. Greater flexibility: Accepting bitcoin provides greater flexibility if and when the traditional payment system falters. Furthermore, many bitcoin payment tools allow the merchant the option to invoice in dollars and receive either bitcoin or dollars.
7. Environmental benefits: Contrary to popular belief, Bitcoin is a net positive for the environment as the process of mining enhances energy companies’ efficiency and empowers the growth of renewables. As the industry leans towards sustainable energy sources, the carbon footprint of Bitcoin transactions is set to decrease.

III. Implementing Bitcoin in Business Operations

Every business, whether a cozy corner café or a sprawling enterprise, has its own unique needs when it comes to accepting payments. For that reason, it’s essential to understand how bitcoin could fit into your specific business: A café might find it perfectly suitable to use a simple mobile Bitcoin wallet for transactions, but larger businesses (or those seeking a polished and professional approach) might opt for a more comprehensive integration. Whatever your business size or aspirations, this guide is tailored to provide insights and steps to seamlessly incorporate bitcoin payments.

Step 1: Learn about Bitcoin

Before we dive in, it’s important to learn about Bitcoin and why it should become a vital part of your business. It’s more than just another payment method; it’s a groundbreaking new currency and a powerful monetary network. Adopting Bitcoin won’t just expand your payment alternatives but could also lower operational expenses. 

The Bitcoin network is the world’s most secure computer network. It’s an unchangeable, censorship-resistant, immutable, global network of value which is beyond the purview of governments and conventional banking systems. Furthermore, it boasts a limited supply of twenty-one million coins — each divisible into smaller units, marking the advent of a genuinely limited and robust currency. Notably, bitcoin is a bearer asset, which means that those who hold bitcoin possess the actual asset, not just a debt or an IOU as is the case with fiat bank accounts.

Read more >> What is Bitcoin & Why Does it Have Value

Step 2: Understand Transaction Layers

Layer 1 (High security and settlement in minutes)

Bitcoin’s base layer is a triple-entry ledger accounting system (timestamp server) where transactions are timestamped, irreversible, publicly verifiable, and secured by nodes and hash power. This makes it the most secure financial settlement network ever created.

With settlement roughly every 10 minutes, Layer 1 is best suited for high-value transactions where instant finality isn’t required—such as buying a car, settling invoices, or large business payments.

Layer 2 (Medium security, with settlement in seconds)

The Lightning Network enables near-instant bitcoin transactions without compromising the security of the base layer. Operating as a second-layer protocol, it allows users to transact off-chain while remaining secured by Bitcoin’s triple-entry accounting system. When a channel is opened, funds are locked into the base chain, and from that point, transactions occur off-chain as state updates between channel participants—similar to an abacus keeping track of balances. The base chain remains unaware of these transactions until a channel is closed, at which point the net result is settled on-chain. With settlement speeds faster than Visa or Mastercard, Lightning is ideal for everyday payments in cafés, retail shops, and beyond.

Now that we understand the layers, let’s talk about wallets. 

Step 3: Choose a Bitcoin Wallet

Accepting Bitcoin without proper security measures is counterproductive. Wallets function as digital safes for bitcoin, ensuring its security and facilitating transactions by generating Bitcoin addresses.

Businesses transacting in Bitcoin should prioritize self-custody. While some might consider entrusting their bitcoin to third parties, it’s important to be aware of the associated risks. Should a third party mismanage your bitcoin or become insolvent, your business will lose its bitcoin; bitcoin held with a third party isn’t your bitcoin. 

Instead of relying on third parties, businesses should use a cryptographically secure Bitcoin wallet. Various wallets support both transaction layers, capable of generating unique Bitcoin addresses for transactions on either layer. 

Businesses should store bitcoin for the long term in a layer-1 hardware wallet or a multisig wallet. Sending bitcoin from a Lightning software wallet to a Bitcoin hardware wallet is relatively straightforward. We recommend keeping less than a month’s worth of bitcoin in a Lightning or hot wallet.

1. Hardware Wallets are available for layer 1 only. They are typically small hardware devices similar in size and form to a USB drive. They only connect to the internet when connected via USB or Bluetooth, therefore they are considerably more secure.

2. Multisig Wallets are a specialized type of Bitcoin wallet that necessitates the approval of multiple private keys for transactions. These keys can be distributed among senior staff members and directors. For instance, in a 2-of-3 or 3-of-5 setup, the bitcoin can only be transferred if two out of three (or three out of five) keys authorize the transaction. This security measure ensures that no single individual has unilateral control over the stored bitcoin.

Step 4: Point of Sale (POS) Payment Solutions

When deciding on a payment solution for Bitcoin transactions, you should determine if a simple wallet is adequate or if it’s necessary to use a specialized payment app.

Option 1: Use a Basic Lightning wallet

Lightning wallets are primarily designed for personal use and not for commercial transactions. That said, some provide a light-touch POS solution and as such serve as an introductory tool for businesses to familiarize themselves with bitcoin payments. 

To proceed, simply download a Lightning wallet from the Android or App Store. 

• Wallet of Satoshi, a well-known Bitcoin Lightning wallet, introduced a point-of-sale system in 2023. It’s a simple and convenient wallet to use, making it accessible to almost any user. However, Wallet of Satoshi is a custodial wallet, so the company holds the private keys on behalf of its users, meaning you don’t have full control of your bitcoin while it’s on the app. If your intention is to utilize the Lightning network for more extensive transactions beyond small tips or the occasional $1 bitcoin purchases, opting for a non-custodial Lightning network wallet is a more prudent choice. (WoS is not available in the USA.)

• Blink, another well-known Bitcoin wallet (formerly known as “Bitcoin Beach Wallet”) has merchant features that make it easy and flexible for businesses to receive payments over Lightning and on-chain, including LN address, a Lightning cash register, and a printable pay code. Payments can be received in bitcoin and stablesats (a proxy for USD). Finally, transactions can be exported via a CSV file for record keeping. 

We recommend upgrading from simple Lightning wallets should the amount of bitcoin received begin to grow, as basic wallets introduce a number of minor challenges that are easily overcome with a more customized solution.

Option 2: Use a Bitcoin Point-of-Sale app

Specialized payment apps should be the preferred solution for local businesses as they provide a plethora of features necessary to run a business. 

• Labeling: Without labels, payments are received without any descriptive context, creating unnecessary accounting challenges. 

Transaction with labeling: “2023-08-24: Coffee – Latte – $3 – Invoice #12345” 

Transaction without labeling: 2023-08-24 – XYZ123 – $3”

• Address reuse: If a merchant consistently uses a single wallet address for transactions, savvy customers can trace that address on the open Bitcoin network and view the total funds received. To maintain privacy it’s advisable not to reuse addresses, which specialized payment apps can help with. 

Note: While payment processors don’t address the risks associated with zero-confirmation transactions, the Lightning network does. Accepting payments without network confirmations, known as “zeroconf,” can lead to potential double-spending issues.

All that’s required is a mobile phone loaded with one of the following apps, which can be downloaded from the Google Play Store or the App Store. 

• Breez requires nothing more than a cell phone and is instantly operable as a non-custodial Lightning POS terminal. Retailers can easily add items in the app, create a manager password, print a receipt, and send funds out to an on-chain address if needed.

• Zaprite offers a POS-like experience, allowing merchants to accept bitcoin payments in person with ease. Service-based merchants can set up tip pages, enabling customers to leave gratuities in bitcoin. Fiat payments are accepted by connecting payment gateways such as Stripe.
• Coinos is a user-friendly Bitcoin web wallet designed for both individuals and merchants. It emphasizes non-custodial solutions, allowing users to maintain full control over their funds with the flexibility to withdraw anytime. It caters to merchants seeking efficient retail transactions.
• Opago allows small merchants around the world to accept bitcoin in a fast, easy, and secure way by giving access to the Lightning network in their own custom POS terminals. Opago provides a merchant dashboard that details all transactions and provides a rather useful tax reporting feature — particularly for EU merchants. The fee is 1% for all transactions processed through the POS terminals, which cost €99 to buy.
• Bitcoin Suisse Pay is an easy-to-set-up, KYC-free solution. Business owners have the option to choose to instantly receive bitcoin in their preferred Bitcoin wallet or to auto-convert bitcoin to euro and receive the payments the following day in the selected bank account. Each account has one primary device and any number of “receive only” devices, which is suitable for business owners to allow employees to receive payments on their phones, without being able to access the funds. Watch their 90-second promotional video.

• Coin Corner: Checkout offers a simple Bitcoin payment solution. With CoinCorner Checkout, businesses can accept bitcoin payments in-store, online, or via email invoicing. Fees are just 1% and when accepting bitcoin, merchants can either hold BTC or convert instantly to EUR which removes any risk of price volatility. Although CoinCorner can hold bitcoin on behalf of businesses, they do allow recurring Lightning payments to the merchant’s personal wallet should they wish to take custody.

• In VoltPay, merchants can set a tip, but the customer doesn’t get to choose. You can create an inventory of products within the app, which can be useful for a small café with a limited number of products. All payment invoices are visible in the invoices tab. The app can export a spreadsheet of transactions and withdraw bitcoin to a wallet manually.

• Flash is a streamlined Bitcoin point-of-sale solution that leverages the Lightning network for rapid, secure, and cost-effective transactions. The app features a user-friendly interface that generates detailed, labeled invoices while safeguarding privacy by avoiding address reuse.

These setups can be enhanced by using a dedicated phone embedded in an NFC-enabled POS terminal, loaded with any of the necessary apps listed above. These terminals are better than using just a phone, as the customer can see clearly where to tap their phone or Bolt Card to pay for a transaction. 

Option 3: Use an enterprise POS solution

• IBEX Pay specializes in offering enterprise payment solutions over the Lightning network. IBEX Pay allows retailers to assign specific wallet addresses, currencies, and terminals with different branches. Each branch can then use the associated IBEX Pay app to receive payments. IBEX Pay allows retailers to determine whether they wish to receive the payment entirely in bitcoin, dollars, or a mix of both.

• BTCPay Server is a self-hosted, open-source cryptocurrency payment processor designed for businesses. It emphasizes security, privacy, and censorship resistance, allowing businesses to accept bitcoin payments with zero fees and without relying on third-party services. The platform offers essential built-in apps, including a POS app for physical stores and invoicing tools for smoother bookkeeping. While it integrates with e-commerce platforms, its primary value for retail businesses lies in its direct payment processing capabilities and native wallet management. The onus is on the operator to manage the liquidity of channels (in and out) in order to make and receive payments.

• OpenNode provides a comprehensive Bitcoin payment solution tailored for businesses. It facilitates lightning-fast, low-cost Bitcoin transactions through its robust API, e-commerce plugins, and hosted payment pages. Merchants can accept Bitcoin payments and opt for automatic conversion to receive local currencies like EUR, GBP, and USD. OpenNode ensures instant settlements via the Lightning network and offers protection against price fluctuations by allowing automatic bitcoin-to-fiat conversions. Additionally, the platform emphasizes security, eliminating concerns of fraud and chargebacks, and promotes global reach with its cross-border payment capabilities.

Option 4: Are legacy POS solutions available?

Most legacy point-of-sale (POS) systems do not yet support native Bitcoin payments, as traditional payment processors remain heavily tied to the fiat banking system. However, some providers are beginning to experiment with Bitcoin integration, recognizing the growing demand from businesses and consumers.

As demand increases, more traditional POS providers will likely integrate Bitcoin payments, but for now, merchants must use workarounds or hybrid setups to accept Bitcoin while still using their existing systems.

Step 5: How to Process a Transaction

A. Brick and Mortar Payments

Whether you’ve opted for a simple Lightning wallet, or a POS app, the process to accept payments is more or less the same. 

1. Customer places an order: When a customer orders a coffee or any other item, tally the total cost in your local currency as you would for any other transaction.

2. Generate a Bitcoin invoice: Using your payment app, put in the total dollar amount of the order. The app will automatically convert this amount into its equivalent in bitcoin or satoshis (fractions of a Bitcoin) based on the current exchange rate.

3. Display the payment prompt: Once the invoice is generated, your app will display a QR code or activate an NFC instance for the customer to scan or tap with their phone.

4. Customer initiates payment: The customer will open their Lightning-enabled wallet app on their phone. They will then either:

a. Scan the QR code displayed on your device, or

b. Tap their phone against yours if both devices support NFC.

c. Alternatively, if the customer has a Bold Card (Bitcoin NFC card), they can tap that against your device.

5. Payment verification: Once scanned or tapped, the customer’s wallet app will display the payment details, including the amount in bitcoin/satoshis and the merchant information (i.e., your café). The customer should verify that the amount and details are correct.

6. Customer approves the transaction: After verifying the payment details, the customer will be prompted to confirm and accept the transaction on their app. They’ll click or tap the “Accept” or “Confirm” button.

7. Transaction confirmation: Your payment app will instantly receive the payment and notify you of a successful transaction. The Lightning network ensures that this process is quick, often within seconds.

B. Invoicing

Zaprite, CoinCorner Checkout, and Bitcoin Suisse Pay are services that allow anyone to create customized invoices that can be paid with bitcoin or even a bank transfer. The beauty of using such solutions is that the invoice can be issued in dollars, paid in dollars, and still be received in bitcoin. They need not ever know that bitcoin is being transacted; the payer need not even know the payee received bitcoin. 

C. E-commerce Integration

For businesses with an online presence, integrating bitcoin payments can be seamless with solutions like Zaprite, BTCPay Server, OpenNode, Flash, CoinCorner Checkout, or Bitcoin Suisse Pay.

Shopify also supports Bitcoin payments through third-party integrations like BTCPay Server, and OpenNode. Merchants using Shopify can easily add these payment processors to their stores, allowing customers to pay in Bitcoin while keeping checkout smooth and familiar.

Step 8: Educate Staff and Stakeholders

Like any new technology or system adopted by a business, proficiency is critical to leverage its full potential and ensure seamless integration into existing workflows. Stakeholders need to learn about Bitcoin, so as to not make uninformed or rash decisions about the business and its Bitcoin implementation. 

Meanwhile, staff members are at the forefront of daily operations, and their ability to manage Bitcoin transactions effectively will directly impact customer satisfaction and the company’s reputation. Simply put, adequate knowledge safeguards the company’s assets, maintains trust with its clientele, and guarantees that the decision to adopt bitcoin yields the desired advantages. Further, using a solution like Bitwage or CashApp, your staff can be paid in bitcoin, which may lead them to view the company as forward-thinking and progressive in nature. It may also give them the sense of having a vested interest in the business and value their work more.

Step 9: Accounting and Tax Considerations

It’s critical to be aware of the tax implications and accounting requirements when dealing with bitcoin. Regularly consulting a financial advisor or accountant familiar with cryptocurrency can ensure compliance and proper reporting. In the USA, the Financial Accounting Standards Board (FASB) has allowed fair value accounting from 2024. So businesses based in the USA can mark their treasury up or down on their books accordingly.

In most jurisdictions, taxation only applies when the asset is being sold. So a reasonable goal for most small businesses could be (at least in the early stages) to stack a small percentage of bitcoin that will appreciate in value over time. It’s important to keep a record of transactions so that capital gains can be calculated accurately in due course.

Should a business have tight cash flows, then it would be useful to keep the volume of bitcoin received low, which can be done by setting up the payment app to receive payments mostly in dollars. 

Disclaimer: This article, including any advice and information contained herein, is provided for general informational purposes only and should not be construed as tax advice. Bitcoin Magazine and the author are not offering tax advice to readers. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Readers should consult their own tax advisor or accountant to understand the tax implications of their investments and financial decisions.

Step 10: Bitcoin Accepted Here

Let everyone know you accept bitcoin. At the very least, display a sticker or sign at the checkout to signify that bitcoin is a valid payment method. Additionally, placing a sign on your shop’s window or exterior wall can attract the attention of passers by, especially Bitcoiners.

Collaborate with local Bitcoin enthusiasts and join Bitcoin meetups to promote your services within the local Bitcoin community. Consider contacting local bloggers and/or media to create a local PR campaign, which would inform the broader community about this alternative payment option. Making payments in bitcoin more attractive than dollars would also be hugely advantageous to businesses, assuming the margins are not already too thin. A business that can build bitcoin reserves should benefit greatly from its long-term appreciation.

The above image is a snapshot of BTC Map, 2024.

Of course, you should add your business listing to Satmap and BTC Map, so that your business is noticeable to potential visitors from around the world.

IV. Challenges and Considerations

Bitcoin is young: Bitcoin is still in its nascent stages. Drawing parallels to the early days of business websites, it should be considered an addition to traditional payment systems, not a replacement. The benefit of accepting bitcoin early is better than having a business website in the ’90s. By receiving bitcoin and adding it to your company’s treasury, your business benefits from its price appreciation relative to traditional currencies. Companies like Newegg, Starbucks, Microsoft, Bed & Beyond, Tesla and much more recognize the benefits and accept payments.

POS hardware solutions like Clover, Toast, and Square will integrate bitcoin in due course, if they haven’t already done so. Until then, the onus is upon small businesses to learn about bitcoin and implement a solid solution for their business. 

Price volatility: Bitcoin’s price can be volatile. However, with strategies like immediate conversion or fund splitting, businesses can mitigate potential risks.

Security protocols: Adopting best practices for securing bitcoin assets and transactions is crucial to prevent potential breaches.

Regulatory landscape and taxation: Staying updated with regulations and tax laws is essential to ensuring compliance. In most jurisdictions the taxing authorities treat bitcoin as an investment subject to capital gains tax. We recommend talking to your accountant or tax advisor on how tax would be applied to any bitcoin you receive.