Note: PayFast no longer supports Bitcoin payments as of 20 July 2019. You can read more about why PayFast ended support for Bitcoin.
Starting today, PayFast sellers can start accepting Bitcoin payments from local and international buyers. Note that Bitcoin payments are currently in beta testing mode.
PayFast entered into an exciting partnership with South Africa’s biggest Bitcoin exchange, Luno (previously known as BitX), which will allow buyers to make Bitcoin payments to PayFast sellers.
What makes this different from most Bitcoin platforms/transactions, is that while buyers will make a Bitcoin payment, sellers will receive South African rand in their PayFast accounts (and then, bank accounts).
What is Bitcoin
Simply put, Bitcoin is an innovative digital payment method, performed over the peer-to-peer Bitcoin network.
For a more thorough explanation, you can read this.
How can buyers receive and save Bitcoin?
Bitcoin can be obtained in one of three ways:
- “mining” for it
- buying it from an exchange
- receiving it in a Bitcoin transaction
The bitcoin is then stored in a Bitcoin wallet. Bitcoin wallets don’t cost anything and can be opened up by anyone, usually in under a minute.
There is a predictable amount of bitcoin in circulation and a limited amount is released over time. Newly released bitcoins are retrieved and Bitcoin transactions are confirmed by computers all over the world, in processes known as “mining”.
Since it takes a certain amount of know-how, operating power and electricity, mining is generally the most complicated way for the average person to get Bitcoin.
There are Bitcoin exchanges in countries all over the world. Luno (previously known as BitX) is South Africa’s biggest Bitcoin exchange and anybody with a verified Luno account can purchase Bitcoin, simply by making an EFT to their account and buying it at the latest rate of exchange.
Anybody who has Bitcoin in a Bitcoin wallet can send it to anybody else –anywhere in the world— provided that the recipient also has a Bitcoin wallet.
There are numerous advantages to accepting and using Bitcoin:
- It can be much cheaper to accept Bitcoin than other international payment methods
- Transactions are not subject to reversals or costly chargebacks
- Payments can be sent and received from almost anywhere in the world
- It is fast (particularly compared to international bank transfers)
It’s often mentioned that the Bitcoin rate of exchange is very volatile. It’s all rather logical, since it is determined by the market, which collectively “decides” what the value of it should be. This is very much the same way that the market collectively and continuously decides what the price of other resources, like platinum or gold or currencies, should be.
Herein lies the biggest problem for sellers: volatility. If a seller listed a product on their website for 1 BTC (at an exchange rate of R6900) and someone purchased that item at a later date, when the rate of exchange is lower (say R6000), they would ultimately lose out on the transaction (or have some explaining to do to their accountant).
Sure, the seller would have 1 BTC in their possession, but that single bitcoin might be worth less than what the product originally cost.
How PayFast/Luno (previoulsy known as BitX) solves this
In short: sellers don’t receive Bitcoin, so regardless of the BTC/ZAR exchange rate, they will receive the South African rand amount for their payments.
A step-by-step explanation
1) PayFast sellers will still display their products and services in South African rand, as they always have.
2) When a buyer visits a PayFast seller’s site and clicks to buy an item, they will be shown Bitcoin as a payment method (in addition to the other enabled payment methods).
3) The buyer is shown the BTC amount –at the current rate of exchange as provided by Luno (previoulsy known as BitX) — and a Bitcoin address where they should send the funds.
4) After sending the funds (using whichever Bitcoin wallet they want to: mobile, desktop or cloud), they click on a verification button on the PayFast engine.
5) Luno (previoulsy known as BitX) sends confirmation to PayFast that the funds have been received.
The buyer sees a success message and gets redirected back to the seller’s website. The seller will receive a notification from PayFast stating that a payment has been received.
6) As for all supported payment methods, the amount will immediately reflect on the seller’s PayFast account in ZAR (minus our nominal fee).
How to enable Bitcoin payments on your account
Sellers simply need a verified PayFast account.
Opening a PayFast account is instant and free and the verification process is usually completed in under eight business hours. Log in to your PayFast account, navigate to Settings and click to enable Bitcoin (or any other supported payment methods).
If you have a PayFast account, but you’re not sure if it can receive payments or if it is verified, simply log in and click on the Account tab.
That’s it, nothing else is needed!
Note: as a seller, you don’t need a Bitcoin wallet, you won’t receive Bitcoin and you don’t even need to understand Bitcoin (but it surely helps) 😉 Simply know that with it enabled on your account, you’ll enable buyers to pay you from anywhere in the world using one of the most exciting new payment methods available.
Comment below or if you have specific support questions, reach out to our friendly Support Team.