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Bitcoin gains popularity: why more online merchants should accept it

September 5, 2014

Bitcoins are becoming increasingly popular and widespread in the merchant processing world.

Bitcoins are becoming increasingly popular and widespread in the merchant processing world. The San Francisco Bitcoin exchange already contains 1.6 million-customers and there are approximately 35,000 companies that accept the digital currency. Among the biggest companies that use Bitcoin are DISH Network and Overstock.com. Merchants are adopting this new currency because it offers several benefits to increase net revenue by cutting down on operating costs. 

Bitcoin presents a system for getting money quickly. Processing Bitcoin is faster than with credit cards,which may sometimes take up to a week for funds to leave escrow. Bitcoin is typically fully processed in a day or two. Cash on hand is an important asset for any business and the speed at which a merchant is paid is always an aspect worth paying attention to. 

Many credit card purchases can be refunded, but this is not the case with Bitcoin. When a credit card customer receives a faulty product or does not receive a product at all, the transaction is reversed and the merchant may be charged an additional processing fee of $10-15 for the refund. Purchases in Bitcoin are final, so there are no refunds and no returns.

“Bitcoin puts all the power in the merchants hands,” claims Bitcoin Foundation member Kevin Rand.  

Protection against fraud
Credit cards are linked to personal identification information, which makes them susceptible to fraud. Bitcoin is not linked with any personal information such as name or address and thus offers a level of protection against identity theft and fraud. It is important to mention that while Bitcoin does not collect personal information, Bitcoin exchanges do collect some information as necessitated by state and federal laws, in order to set up Bitcoin wallets. 

Perhaps the most attractive feature of Bitcoin, especially to small businesses, is lower transaction fees. Many small merchants will pay between 2-4% per credit card transaction. Bitcoin on the other hand charges 1% per transaction. With no account set up or maintenance fees, the only cost incurred is when Bitcoin currency is converted to actual currency. Increased sales in Bitcoin can result in higher net profits for small merchants who do not have the economies of scale necessary to lower transaction costs with credit card companies. 

In addition to lower transaction fees, Bitcoin makes it easy to accept international payments because there are no cross-border fees. Adam White, director of business development and strategy at Coinbase makes the case that Bitcoin allows for less expensive cross-border transaction fees, resulting in cross-border payments being easier, faster and cheaper.

“When you accept Bitcoin, you can accept payment from anyone anywhere in the world at the speed of an email,” says white. 

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