My company prefers to be paid in Bitcoin as much as we can. For me, everything is easier that way. However, there are definitely tradeoffs being made. For example, bitcoin is rather volatile in USD and CAD terms. How do I know how much BTC to charge for something? What happens if the value of bitcoin goes up or down in the weeks following the payment of the invoice? Do we offer more services, or ask for further compensation from our clients? These are the sticky questions that we’ve been confronted with since deciding to accept payment in bitcoin.
We recently invoiced a client using software called Zaprite that aims at solving some of these challenges. This is my review of using Zaprite.
Zaprite: A Bitcoin Invoicing Software
I stumbled across Zaprite on Twitter while researching companies building on top of bitcoin and lightning. Mrugakshee and I were looking for software that simplified our current process for paying and getting paid in bitcoin. Zaprite is a beautifully designed application with a very simple feature set.
Make it easy for people to create invoices denominated in BTC
Make it easy for people to pay invoices denominated in BTC
Using Zaprite Invoices
The below screenshot gives you a good idea of the features that are available within Zaprite. It has all the features you would expect from a typical invoicing software, with the added bonus of being able to request payment in bitcoin.
Invoice line items can be created
Invoice date, and payment due date can be set
Invoice status connected to the bitcoin blockchain to listen for payments on our provided address
When you generate an invoice with Zaprite, you are given a link that your client can use to see the payment details. Since you’re quoting the amount owed in CAD or USD, the amount of BTC owed is not decided until the client clicks the link to pay the invoice. Then they are shown a screen like the following.
As you can see, the client is given a time limit in which they must pay the invoice. The amount of bitcoin owed is locked into the invoice for that amount of time. If the client fails to pay the amount within that period of time, then they will have to click the link again to generate a new rate.
Check out this test invoice to see how the whole process works. Click the “Pay Invoice” button to generate a rate in BTC. Don’t feel compelled to pay the invoice, but all donations are welcome nonetheless!
Paying and Getting Paid in Bitcoin
There is at least one big issue with paying and getting paid in bitcoin. The amount of bitcoin we would pay or receive varies on a minute-to-minute basis. Because we charge in USD and CAD, the amount of bitcoin we end up receiving is variable.
Lock in Your Terms
We once had a client pay us in bitcoin. Bitcoin subsequently rose in value by 20% the following week. The client messaged us and asked if we would give them extra services to account for the rise in the price of bitcoin. While I understand where this person is coming from, we made it clear in the terms of payment that payments are final. Bitcoin could have easily fallen in price the following week and at that point, we were prepared to suffer the relative loss. We wouldn’t go back to the client and ask for more bitcoin.
If you intend on charging bitcoin for your goods or services, it is important for you and the client to understand that the payment is final. You are both accepting the reality that the price of bitcoin will fluctuate in the short and long term. Whether or not it fluctuates in your favor is not determined at the time of payment. However, both parties agree not to hold the other accountable for external factors such as market volatility.
Denominate in Bitcoin
You can avoid getting paid a variable amount of bitcoin altogether if you just decide to denominate your services in terms of BTC. This is more of a niche thing to do in today’s day and age, but I expect it to become more commonplace as bitcoin becomes a more widely distributed medium of exchange. I would ideally like to be charging for our services in bitcoin, and bitcoin only. Then if people want our services, they must obtain bitcoin before giving it to us. At the same time, I value being flexible for our clients and accommodating whatever currency they would like to pay us with.
Paying in Bitcoin
We pay some of our contractors in bitcoin. One of our contractors lives in Kenya and another in India. If we were sending money through other channels, we would face other challenges. For example, any payment will take at least 3 business days, and both sides will pay a fee.
When we pay with bitcoin, they receive the money immediately, and my company pays the fee. Then the money is in the hands of our contractors and it is entirely within their hands to cash out into FIAT or keep it in BTC. This process is commensurate with our philosophy of running one’s finances. That is, with themselves at the helm of their own finances. We think this is the way that people can retain maximum optionality with managing their finances.
Happy to Give a Discount
We’re actually happy to give a discount on our services in order to incentivize people to pay us with bitcoin. It makes sense to do this so that we avoid the bank as much as possible. We would end up spending time and money converting whatever USD or CAD into bitcoin anyway. If our clients wish to give us BTC instead, then this is convenient for us, and we’re happy to accept a discount.
I imagine a lot of bitcoin entrepreneurs will operate like this in the short to medium term in order to bootstrap a bitcoin-based economy. As long as we’re then holding that BTC long enough for it to appreciate in price, then the discount is justified.
Much Left to be Done with Bitcoin Payments
There is still a long way to go before bitcoin becomes a global medium of exchange. It is still being used as a medium of exchange in niches and pockets of enthusiasts. Additionally, it doesn’t make a ton of sense to accept repeat payments from our clients. Nor does it make sense to pay our contractors month after month with individual bitcoin payments. For each individual bitcoin payment, either our client, or us will need to pay a fee that can range from $5 - $25 depending on network congestion. Lightning simplifies this into one transaction fee at the start of the engagement, and another one at the end.
An improvement upon our own model would be to set up lightning channels with each of them for an amount of bitcoin that we anticipate on sending/receiving throughout the duration of our engagement. This way we can send bitcoin back and forth along these channels instantly and for basically no fee.
I look forward to the day when Zaprite applies their stellar UI/UX skills to simplifying bitcoin payments on the lightning network. I’ll be sure to post an update when that takes place.
Cheers,
Keegan
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