Around the world, the number of vendors accepting Bitcoins as a form of payment is rapidly expanding. Among the most noteworthy of stores to begin accepting Bitcoin is the online giant Overstock.
If you are considering jumping on the bandwagon and offering the virtual currency as a form of payment, you are certainly not alone. Whether you own an online store or a brick-and-mortar business, there are certainly many advantages associated with accepting Bitcoins. Entrepreneur.com reports that there are approximately 11 million Bitcoins currently in circulation. i The virtual currency, which are essentially mathematical algorithms, have steadily increased in value and are used to trade all types of goods and services online and offline. Among the well-known vendors that have begun to accept the currency, including Reddit, WordPress, and many vendors on Etsy.
Bitcoin can certainly offer an impressive array of benefits to business owners, including the fact that there is no credit card transaction or bank fees associated with accepting it. As a result, business owners can enjoy higher profit margins and open their goods and services to a global audience. Since Bitcoin transactions can be completed in a completely anonymous manner and instantaneously, they can be particularly attractive to individuals with privacy concerns.
There is also the associated benefit of eliminating chargebacks when accepting Bitcoins as payment. As most business owners are aware, chargebacks can be a bear to handle. With Bitcoins, chargebacks are not a problem because they simply cannot exist. This is because Bitcoin transactions are permanent. Once a customer pays for your good or service with a Bitcoin, there is no reversal.
If you are interested in creating your own account that will allow you to accept Bitcoins, you will first need to open a merchant solution account that will allow you to do so. There are many options from which to choose, including Mt. Gox, BitMerch, and BitPay. These Bitcoin exchanges make it possible to exchange Bitcoins for U.S. dollars or other currencies. A nominal fee does apply, which varies from one exchange to another.
Coinbase is also currently making it much easier for vendors to accept the digital currency. According to the company's website, ii your first $1 million in payment processing is free and will not incur any transaction fees. The company also ensures that there is no exchange rate risk.
Once you have signed up with a Bitcoin exchange, you will need to let prospective customers know that you accept Bitcoin. This can typically be accomplished by posting an icon on your online store or website that advises customers that you accept Bitcoin.
While the acceptance of Bitcoins has certainly become more popular with online stores, it is not out of the realm of possibility to accept it at your brick-and-mortar location. In this type of scenario, the transaction can be made using a mobile phone app, such as Blockchain or Paytunia Bitcoin Wallet. Both of these apps require the use of a QR code, so it will be necessary for you to have a quick response code placed near your checkout.
While getting set up to accept Bitcoins is fairly straightforward, the process is not without its challenges. Among the biggest potential hurdles that will need to be crossed is pricing. There is no denying that Bitcoins are volatile. In late November, CNN reported that the price of a single Bitcoin topped $1,200. According to CNN, Bitcoin rose to a previous all-time high of about $900 earlier in November before dropping to $500 within just over 24 hours. iii As a result of such volatility, it is necessary for vendors accepting the digital currency to update prices accordingly, which can involve multiple price changes per day. Another option would be to ensure the use of a shopping cart that is able to manage exchange rates as they change in real time.
The benefits associated with accepting Bitcoins are certainly present, but you must also consider what you will do with Bitcoins once you begin to accept them. There are a couple of different options available. One is to exchange them for your local currency, while the other is to simply hold onto them to see how high they will go.
For its part, Overstock has stated that it does not plan to hold any Bitcoins. As reported by The Telegraph, Overstock has partnered with Coinbase to complete Bitcoin transactions. iv An exchange rate will be established before each payment is finalized. As a result, the buyer's Bitcoin will then be converted into dollars and the dollars will be transferred to Overstock.
Are Bitcoins right for your business? It's certainly a new model, but if you are ready to embrace a new frontier, there are certainly plenty of prospective customers who may be willing to help you do it.
i) Entrepreneur.com. Shandrow, Kim Lachance. Accepting Bitcoin Payments: The Risks and the Benefits.
ii) Coinbase: https://coinbase.com/merchants
iii) CNN.com. Rooney, Ben (2013, November 29) Bitcoin Worth Almost as Much as Gold.
iv) Telegraph.co.uk. Curtis, Sophie (2014, January 10) Major US Retailer Starts Accepting Bitcoin Payments.