Bitcoin is increasingly penetrating almost every sector of the economy with a focus on mainstream adoption. The asset has moved from just an investment platform with new opportunities emerging for using the asset in real life. More platforms are now coming on board, enabling users to make payments or pay bills with Bitcoin. Currently, through Bitcoin, you can pay almost everything from utilities and credit card bills.
Getting started with paying bills with Bitcoin
The first stage is to get a Bitcoin wallet that will serve as your Bitcoin bank account for paying the bills. Note that there are dozens of wallets compatible with the web, desktop, and mobile devices. However, look out for the security features of the wallet to ensure your Bitcoins are safe.
The next stage is to buy Bitcoins. You can buy Bitcoin through the many cryptocurrency exchanges. Remember to research the Bitcoin price and the reputation of the exchange you have selected. Furthermore, some wallets also allow users to buy cryptocurrencies directly. You can also buy Bitcoins through your credit card or a bank account. This process is instant in most cases. You can now start paying bills with Bitcoin.
How to pay your bills with Bitcoin
With increasing Bitcoin adoption, there are now several avenues to pay bills through the digital asset. You can pay bills with Bitcoin through the following platforms;
Bitcoin debit card
Bitcoin debit cards are the most convenient form of paying bills with the asset. They bridge the gap between decentralized currencies and the traditional marketplace. Most Bitcoin debit cards instantly convert your BTC into fiat at a merchant’s location. Each transaction carries a small processing fee. Note that depending on your service provider, the card might attract withdrawal, transaction, or monthly account fees. Remember that since the price of Bitcoin fluctuates, the amount of Bitcoin needed to complete a transaction can also vary. This makes crypto debit cards perfectly suited for paying your bills. You can also sign your card up for automatic bill payments, just like a traditional credit or debit card. Here are some of the top Bitcoin debit card providers.
BitPay provides cryptocurrency debit cards in the U.S. with no conversion fees when used within the U.S. The BitPay card supports six cryptocurrencies, including Bitcoin and Ethereum, alongside eight different fiat currencies. BitPay attracts zero transaction fees for purchases made in the U.S. However, it attracts a 3% fee for holders traveling abroad. It also attracts a $2.50 fee to withdraw cash from an ATM.
Crypto.com offers seven different metal Visa debit cards with holders able to spend up to 90 cryptocurrencies and six fiat currencies. Crypto.com’s cards offer 3% to 5% cashback, rebates on more streaming services, no ATM withdrawal fees, and interbank exchange rates for currency exchanges.
The Wirex card currently supports 19 cryptocurrencies and about a dozen fiat currencies. Cardholders incur zero issuance, monthly, or withdrawal fees. The card attracts only a 1% fee to fund accounts with cryptocurrencies. The Wirex card offers cash back rewards in Bitcoin, including up to 1.5% back on all in-store purchases.
Bitcoin bill payment service providers
Bitcoin payment gateways enable merchants to accept transactions in Bitcoin. Payment processors allow for the instant transfer of Bitcoin into fiat currency. In the recent past, most platforms partnered with Bitcoin payment providers like BitPay to process online bill payments. Bitpay allows users to manage and spend their Bitcoin with the BitPay App, and turn Bitcoin into fiat currency with the BitPay’s Prepaid Mastercard. Furthermore, Bitpay’s payments attract a fee of 1%.
Coinbase can is another payment gateway as it facilitates instant currency conversion from Bitcoin into fiat currency. The service is entirely free on the first $1 million of transactions, after which Coinbase levies a merchant fee of 1%.
Coingate supports 40 cryptocurrencies. The platform charges a 1% fee on all transactions, which usually takes about 1 hour.
Some companies and service providers allow paying bills with Bitcoin direct payments. In this case, you can just pay with Bitcoin directly from your wallet as you would have paid using fiat currency. If a service provider has the option of Bitcoin payments, you need to copy their Bitcoin address and paste it into your wallet. Type in the amount of Bitcoins into the payment box and click ‘send’ and the transaction should be completed in minutes.
How paying bills with Bitcoin works
The process of paying bills with Bitcoin to a small extent varies, but generally, the process is similar. Before paying the bill, enter your bill amount in USD in your wallet and provide the payment details like the biller’s account details, email, or bill payment URL. You will get a quote for the exchange rate for converting Bitcoin to USD. If you are okay with the value, proceed and pay the bill.
At the same time, when a biller allows direct bill payment, copy the biller’s Bitcoin payment wallet, paste it into your wallet. Enter the amount you wish to pay and send.
Alternatively, you can use a Bitcoin debit card to pay your bills. Ideally, you will need a Bitcoin wallet and link to your debit card from popular providers like Visa. You can then use your debit card to pay bills like you would use a bank debit card. Remember that each bill payment service or cryptocurrency card provider can limit how much you can spend per day. Look at the terms and terms and conditions of each provider if there are any limits.
What Bills can I pay with Bitcoin?
The type of bills you can pay with Bitcoin greatly varies depending on what service you’re using and the merchant. For instance, some service providers will accept Bitcoin payments in debit cards or direct payments from your BTC wallet. Here are some of the everyday bills you can pay with Bitcoin.
- Electricity and gas bills
- Phone bills
- Credit card bills
- Gym memberships
- Insurance premiums
- Tax bills
- Hotel bill
- Restaurant bills
Tax implications when you pay bills with Bitcoin
The IRS has classified Bitcoin as property; therefore, you need to file taxable gain or loss every time you exchange virtual currency for goods or services or U.S. dollars. You risk incurring penalties if you fail to disclose the gains or losses made using Bitcoin in your transactions.
You will be eligible for a taxable income if the fair market value of the service you receive exceeds your basis in the virtual currency. On the other hand, you will have a taxable loss if the fair market value of the property you receive is less than your basis in the virtual currency.
Overall, cryptocurrency tax is a bit complicated, and tax treatment varies depending on your circumstances. It’s advisable to contact a certified accountant for details about properly disclosing cryptocurrency on your tax returns.
Advantages of paying bills with Bitcoin
Compared to traditional financial markets, using Bitcoin and cryptocurrencies, in general, carries several advantages as highlighted below.
Paying Bitcoin bills cannot be traced back to the user unless you chose to publish the Bitcoin transaction details. The generated anonymous Bitcoin address for user purchases changes with every transaction. However, this does not mean that the Bitcoin transactions are entirely anonymous. It is less easily linked to personal identity than traditional forms of payment.
Factors to look out when paying bills with Bitcoin
Before deciding to pay your bills with Bitcoin, look out for the following factors, especially when using a service provider.
Always review the terms and conditions to understand the rates. Look out how far above the market rate you will incur for paying your bills. Furthermore, check if the provider has extra fees on the exchange rate.
In some cases, while paying bills, something might go wrong, and you will need to file a complaint. The complaint can only be resolved if the customer service support service is top-notch. Look out at their availability and how long it takes to respond to queries.
Most service providers have transaction limits imposed daily. Check what limits are there on the amount you are allowed to pay per transaction. Additionally, the processing time is also an essential factor to look out for.
There is no doubt you might encounter some fraudulent service providers therefore, it is important to carry out sufficient research. Scan the internet for bill-paying company’s market reputation by reading third-party reviews. Look out at factors like security and customer service.
Bitcoin payments are increasingly becoming more integrated with various service providers. Many blockchain startup companies are emerging, making it easier to convert cryptocurrency to fiat. As their efforts continue, it will become much easier to use Bitcoin for everyday use. Being a fairly new phenomenon, always carry out due diligence before opting to pay your bills with Bitcoin.