Bitcoin, the best known of many digital payment monies, has made inroads into mainstream trade, including brick-and-mortar merchants. Some ecommerce websites are already accepting Bitcoin and if you are contemplating joining this group, here are a few things you ought to know.
While Bitcoin is your best-known virtual or electronic money, others exist. Litecoin, Worldcoin, and Dogecoin will also be virtual monies which are gaining traction. Watch “10 Bitcoin-like Cryptocurrencies” for more suppliers.
How Virtual Currency Works
Consumers buy digital money from many online exchanges using credit cards or wire transfers. Once bought,”coins” are saved in an online”wallet,” which can reside on the trades or onto a users computer. There are now 12.3 million coins outstanding, and ownership is concentrated among a relatively small group of people. The complete distribution is capped at an arbitrary limit of 21 million. There’s a limited number of Bitcoins, in other words, which is vital for its stability and acceptance.
Bitcoin purports to provide customers greater privacy because users don’t have to give personal credit card details. They don’t even need to give their address if they’re digitally downloading services and products such as music, games, or software. The anonymity is what’s law enforcement agencies feared because offenders have flocked to electronic currencies to purchase and sell illegal products and services and launder money.
China, which has an extremely busy Bitcoin marketplace, recently banned local financial institutions from dealing with Bitcoins, causing the market to lose half its worth.
What Merchants Accept Bitcoin?
Those ecommerce merchants that take Bitcoin are selling products which attract younger millennial consumers that are familiar with cutting edge technology. Overstock.com, which started accepting Bitcoin payments in December 2013, is the largest online merchant to adapt digital coins. Another website that accepts digital money is BitcoinShop, an Amazon-like mall that takes just 3 crypto-currencies as payment.
Cory Vines is an apparel merchant that only recently started accepting Bitcoin. Creator Daniel Lieberman says he did so because some clients requested it, but more importantly it allows Cory Vines to distinguish itself as the sole active wear retailer to take Bitcoins. Additionally, it permits the few clients who only shop with electronic currency to purchase from Cory Vines. Lieberman adds that the charges are less expensive than those from credit card intermediaries, and his firm gets paid a lot more quickly.
Cory Vines offers three payment options at checkout: credit card, Dwolla, and Bitcoin.
Cory Vines utilizes Bitcredits, a new Canadian-based Bitcoin payment processor to deal with its Bitcoin payments. Bitcredits charges.9 percent per transaction for its own services. Lieberman acknowledges he may get rid of money on yields based on price fluctuation, but he thinks the risk is manageable. Lieberman thinks his earnings will increase as a consequence of accepting Bitcoins and cites the example of Overstock.com, which saw $1 million in Bitcoin earnings in 1 month.
Other digital money payment processors are: GoCoin, Coinbase, and BitPay.
Benefits of Accepting Digital Currencies
- Benefits over credit cards. Prices are lower, usually 1 percent of the sale versus a normal three percentage for credit cards.
- Bitcoins are accepted internationally so that you don’t have to take care of various currencies.
- No alternative for chargebacks because after electronic money is traded, the transaction can’t be reversed.
- Digital money is extremely volatile. Prices fluctuate by tens of thousands of dollars in the space of one hour. Prices have varied from $13 up to $1,200 for a single Bitcoin since the digital money was established in 2009.
- Many customers won’t ever use digital payments since virtual money has a suspect standing and many individuals do not know how it works. Digital money has attracted the attention of law enforcement agencies and has been the recipient of a whole lot of negative publicity.
- Fraud, theft and hacking of digital money are common and since there’s absolutely no regulation, law enforcement seldom intervenes. However, that wasn’t true with Silk Road, an internet website that the FBI closed down in October 2013 for selling illegal weapons and drugs. The owner of the website was later detained.
- Returns can be problematic of items paid for with electronic money because the coins may be worth more or less on the day the item is credited back to a virtual wallet than they had been on the day of item purchase. Some merchants who accept Bitcoin don’t allow returns on merchandise bought with the electronic currency. Many customers will balk at that.
What would really make digital money mainstream is increased use by customers. This would eliminate having to buy or market Bitcoins on exchanges, as Bitcoins are the money, without a need for exchanging. Earlier this season, SurveyMonkey conducted research on Bitcoin awareness and usage. In an admittedly unscientific survey, SurveyMonkey found that while 64 percent of respondents know of Bitcoin, only 11 percent have used it. Fifty-four percent stated they weren’t likely to use Bitcoin later on.
While there’s absolutely no rush to provide virtual money to customers as a payment option, if your services and products attract those that are technology early adopters, you might wish to investigate this choice.