Definitely a third party service. Then place the bumper sticker "No Bitcoins on our servers" somewhere :)
I integrated MtGox and BitPay. Compared to Google Checkout (XML mania) and PayPal (documentation drama) they take about 5 seconds to implement (test is another thing entirely).
I went with MtGox in the end since it was cheaper. I was then happy to offer a 3% discount to make up for the fees users got stung with purchasing BTC. However MtGox has a number of bugs that make it a show stopper for some customers.
If you ask the right questions they will acknowledge the bugs and tell you they are working on it and need plenty of time. I would probably not use MtGox if I had known about the bugs prior to integrating.
Just wanted to public thank you for detailing your experience as a merchant, setting up with MtGox and BitPay.
Just curious, would you give BitPay a second look?
Obligatory: I'm currently using MtGox and haven't really had the time to try BitPay, but the MtGox legal issues could be a reason to need a second option.
Coinbase! I'm not with YCombinator, who is invested in Coinbase, but I checked out Coinbases API and they KEY WORDING: as a merchant accepting it, you're not subjected to the volatility of Bitcoin's exchange rate, if your batch at the end of the day is $1k you can expect that.
I'd personally go with Coinbase (we're going to add it shortly), since they have probably the best API.
All of the Bitcoin options suffer from a long delay between "oh, I want to use your product/service" and "can pay", if your user doesn't already have bitcoin. As long as 5 days.
What I'd recommend, if you're selling a service, is to do a 15-30 day trial AND take Bitcoin (or give someone free initial service IFF they pay with bitcoin, if you don't do demo anyway), to give them a chance to get started immediately. Unless you're shipping a physical product, losing 5 days of service if someone's bitcoin payment doesn't happen isn't a big deal, usually.
I integrated MtGox and BitPay. Compared to Google Checkout (XML mania) and PayPal (documentation drama) they take about 5 seconds to implement (test is another thing entirely).
I went with MtGox in the end since it was cheaper. I was then happy to offer a 3% discount to make up for the fees users got stung with purchasing BTC. However MtGox has a number of bugs that make it a show stopper for some customers.
If you ask the right questions they will acknowledge the bugs and tell you they are working on it and need plenty of time. I would probably not use MtGox if I had known about the bugs prior to integrating.