With the holiday season in full bloom, merchants and retailers worldwide are gearing up for a spike in sales activity. All of this comes amid growing concerns about the efficacy, privacy and security of legacy payment systems that are currently in use.
While Bitcoin’s growing presence as a store of value has been well documented, scant attention has been given to its utility as a payment network. Many in the digital currency community would like to see this changed, arguing that Bitcoin’s long-term sustainability is largely predicated on its active use within the ecosystem.
Bitcoin enthusiast and merchant adoption advisor Patrick Patton recently shared his opinions on the Colorado Bitcoin Network Slack page. Patton writes.
“Did anyone else take advantage of any Bitcoin deals during the Black Friday weekend? I’ve purchased the vast majority of my gifts with bitcoin (out of 12 gifts, 75% have been with BTC). Yet, there is virtually no discussion I can find of others having similar success. Reddit used to have weekly purchase threads celebrating the act of using Bitcoin in commerce, but now there’s nothing.”
Continues Patton: “I get the feeling there are many bitcoin holders out there who never/rarely try to use it because it’s the “better money.” Fiat is viewed as more convenient, particularly given the perception of bitcoin fees now being “too high.” In my opinion, if Bitcoin fans are not willing to support the businesses that experiment with acceptance, how will we ever grow the Bitcoin economy? How then, ultimately, will Bitcoin have any value at all? I’m rather frustrated with those who speculate on Bitcoin’s long-term success without contributing anything towards building that result.”
Many would agree with Patton, particularly in light of Bitcoin’s emergence as a decentralized payment gateway that allows payments to take place without interference from third-party intermediaries. So what makes Bitcoin such a compelling case for both consumers and business as an alternative payment option?
For merchants and retailers, the case is clear: Accepting bitcoin as a payment method can yield a significant bottom- line savings. In addition to a 3-4% credit card swipe fee when consumers make credit card purchase, businesses can also be subjected to interchange, chargeback and other fees that can quickly add up. These fees are then often passed on to consumers in the form of higher priced products and merchandise.
We’re already seeing some large retailers that accept bitcoin pass on the cost savings to customers. One interesting experiment to keep an eye on in this space is Starbucks. Through a collaboration between Airbitz and Fold, coffee lovers who make a bitcoin purchase through this global retailer can now get up to 20% off. This move could potentially yield Starbucks a ton of savings if bitcoin use achieves a level of significant adoption worldwide.
Purse is another site that offers savings, specifically on goods directly from Amazon. According to the website, shoppers can create a wishlist, chose a discount level and save an average of 20% with transactions assured through Purse Escrow.
Many bitcoin wallets allow users to decide how large a fee to pay when spending. Electing a higher fee can help accelerate the speed of a payment confirmation.
Privacy and Security
Privacy and security are also on the minds of many US consumers right now largely due to a string of major security breaches that severely impacted Target, Neiman Marcus and some other large businesses in recent years.
These security breaches underscore Bitcoin’s value versus that of traditional online payment systems. Bitcoin transactions are secure, immutable and do not contain the private information of customers. This offers strong protection from identity theft.
For businesses, bitcoin can help mitigate merchant losses due to fraud or fraudulent chargebacks. And PCI compliance is not required.
Payment Freedom and Ease
Bitcoin’s can be used for payment worldwide and at any time. No bank holidays. No currency conversions. No third-party intermediaries. Consumers have the freedom to use their money when, where and in what manner they see fit.
Paying in bitcoin is easy and does not require the entry of personal information and additional verification hoops. And thousands of merchants now accept bitcoin either directly, through an online shopping portal or through a gift card exchange like Gyft or eGifter.
Despite these and other compelling arguments supporting bitcoin’s efficacy as a payment network, acceptance has been slow. Says Software Developer and long term bitcoin user Chris Guida
“Promoting bitcoin businesses was fun for a while after the giant bubble of 2013, but now it seems like it’s a better idea to simply wait until people get on board because they really believe in bitcoin’s future. Having merchants start accepting bitcoin, only to drop acceptance after a few months because of UX friction, is painful.”
The benefits above nevertheless demonstrate that there is a strong case to be made for Bitcoin’s payment network value. The positives for both businesses and consumers are significant, and will only increase in adoption as it becomes more mainstream over time.