Despite the fluctuating Bitcoin value, crypto-currency has proven increasingly popular among retailers. Although we cannot talk about Bitcoin reaching critical mass in terms of adoption yet, more and more retailers and small businesses can see the potential in increasing sales by offering more payment choices to their customers.
Among these are big-name retailers such as Amazon, Overstock, CVS and Expedia. On top of this, some of the participating merchants even paid staff bonuses in Bitcoin.
What is Bitcoin?
Bitcoin is a digital currency created in 2009 by someone using the pseudonym Satoshi Nakamoto. This crypto-currency eliminates middle men — ergo banks — and, as such, cuts down transaction costs. Moreover, Bitcoin can be used to make a purchase anonymously.
As a digital currency, Bitcoin is not printed like banknotes, but is produced by “mining”. What this means is that interested people use computers to solve complex math puzzles, and a winner is rewarded with 25 bitcoins around every 10 minutes. Currently, there are nearly 13.5 million Bitcoins in circulation, but there is an upper limit of 21 million units that will be ever mined.
Bitcoin adoption rate at retailers
Because Bitcoin has only been around for five years, its adoption rate needs to be considered with this in mind. However, when looking at the available statistics we can see that its popularity is on the rise.
To put this into perspective: as of Q3 2014, over 75,000 merchants worldwide are now accepting the crypto-currency, according to Coindesk’s State of Bitcoin Q3 2014 report. This is up 19% from the prior quarter, with the market research firm being confident that the number of reach 90,000 by the end of the year.
How to start accepting Bitcoin?
If you are one of the business owners driving the adoption of Bitcoin for the future, here are some things you should know before you start accepting payments.
First, you need to know that Bitcoin is yet to be recognised as currency by governmental authorities, yet it is no different than accepting payment in the form of gift card or foreign currency, for example.
Actually, accepting Bitcoin is a pretty easy and straightforward process. Here are some of the ways you can do it:
Accepting Bitcoin online
Fortunately, there are tools available to allow traders to accept payments both on- and offline (aka: in stores). For e-commerce sites there are many tools available such as Polycoin, Apicoin, Bitcoin Transaction Coordinator, BitPay, Coinbase etc. Some of them, such as BlockChain, only provide the API for accepting payments instantly without the need for sign up or branding.
Smartphone and tablet solutions for accepting Bitcoin
Merchants accepting Bitcoin in stores can use their smartphone or tablet to complete the transactions: all they need is an app that transforms their iOS or Android device into a POS and generates a QR code including the amount the buyer can read with his or her own smartphone.
Business owners can choose from several apps across a variety of platforms. These include EasyBitz, Coinbase, BIPS, BitcoinPay, BitKassa, BitPay, BitPOS, CoinPip, PockesPOS, but there are POS hardware terminals available as well through players such as Coinkite, XBTerminal or BitStraat. The latter requires, however, a bigger investment than just using an app.
SumUp UK became the first mobile payment provider to partner with BitPay in Europe, allowing merchants to accept both cards and bitcoin through their app (however, they have stopped accepting Bitcoin now).
Although the aforementioned payment processors offer the same solution for merchants, there are some features that are subject to change by player.
Payouts – how do I get “normal” money?
There is something else you should keep in mind. When you start accepting bitcoins: you probably need to convert them to currencies used for paying your suppliers, etc. Some payment processors, such as BIPS, BitcoinPay, Coinbase, Polycoin, or Bit-Pay set prices based on the current market rate.
Also, it is worth noting that some merchant services instantly exchange received bitcoins into the preferred currency, unless set up to keep the original currency.
Payouts depend on the payment processor of your choice. Coinbase, for example, sends payouts to the linked bank account on a daily basis, so you don’t have to hold bitcoin if you don’t want to. For converting your bitcoin to preferred currency, however, Coinbase charges 1% plus $0.15.
There are a growing number of users interested in paying with Bitcoin. You can gain their attention by submitting your business online, or displaying the Bitcoin logo at the cash register. It’s time to join the revolution of digital currencies and grow your business!