So – What is Bitcoin Anyway?
In simple terms, Bitcoin is a virtual currency. It can be sent from one person to another through the internet, without having to go through a bank, as card transactions do. After a huge peak at the beginning of 2014, the current value of 1 Bitcoin is around 300 US dollars. There are many benefits around virtual currencies – especially as a merchant. The short video below explains Bitcoin well:
What are the Benefits of Bitcoin for Ecommerce?
1. It’s Fraud-Free
Trading in Bitcoin is similar to doing a cash transaction. There is no third party involved that could later claim the transaction was fraudulent. Bitcoin simply goes direct from one account to another, just like a cash transaction or direct bank transfer.
2. No Charge-Backs
Given that there is no third party, there are no charge-backs. This again means it’s similar to a cash transaction as it hands the power to the merchant and not the consumer.
3. Lower Transaction Fees
Transaction fees for trading in Bitcoin are generally a lot lower than that of a payment service provider. This is great for merchants of any size – credit card fees are notoriously expensive and eat into your profit margins.
In general, a transaction between one Bitcoin wallet to another is free from any fees – however as a retailer you might not want to actually hold stock of Bitcoin – the value can fluctuate so the decision to go down this road shouldn’t be taken lightly.
Luckily, there are some good third parties that will convert Bitcoin into your base currency at a live value rate, and deposit the amount into your bank account. This tends to be much faster than the often long turnaround times for credit card transactions. Coinbase and bitpay are two such services, which are very popular among merchants accepting Bitcoin.
Coinbase offer no charge for the first $1,000,000 and then charge a 1% (or less depending on volume) fee for converting it into your base currency. Their clients include Dell, Google, Expedia, PayPal, and Bloomberg.
bitpay offer a ‘free forever’ plan which includes unlimited transactions and no fees. However they offer paid plans that include better support to their team and solutions. Their clients include Virgin galactic, Newegg, TigetDirect, Gyft and Namecheap.
By using either of these providers, you could increase your profit on some orders, reduce your fraud risk, and receive your payments quicker.
4. Easily Accept International Payments
Being a virtual currency, Bitcoin can be used by anyone from anywhere which removes any border transaction or exchange rate conversion fees. Bitcoin could make it easier – and cheaper – to expand your client base internationally.
Are we missing out? Do we need to start accepting Bitcoin?
It definitely wouldn’t hurt to start accepting Bitcoin. The integration to accept Bitcoin is fairly painless for any merchant, and it can open up new benefits and a new market. It provides fraud protection, lower transaction fees and gets money in your account faster.
Saying that, Bitcoin doesn’t work for every merchant – not because it’s not a great currency or way to accept payment, but because of your own target market. Your market might not overlap with those who currently own and use Bitcoin – it’s tech-forward, and can seem difficult to set up and use for the average computer user.
Nonetheless, being ahead of the curve can offer up some good PR opportunities – Overstock.com had 780 orders placed with Bitcoin on its first day netting them a nice $124,000 in sales.
Are there alternatives?
There are a lot more virtual currencies around, a good overview can be found here on CoinMarketCap. These other currencies aren’t as widely used, and therefore don’t have many third party services making it easy to accept them as payment like coinbase and bitpay. That’s not to say it’s not possible – GoCoin operate Litecoin and Dogecoin in addition to Bitcoin, however they do have a flat fee of 1%. This is an expanding market, and it is worth keeping your ear to the ground!
