The following guest post is one of a series courtesy of Marco Streng, CEO and Co-founder of Genesis Mining.
The price of Bitcoin is extremely volatile and has been since inception. It is not uncommon for the price to increase or decrease 10%, 20% or even 30% in a single day.
From the outside, this volatility can seem very disconcerting to potential merchants. However, where some see a problem, others see an opportunity. Services have been created that make this volatility irrelevant. Companies such as BitPay, one of the largest payment processors in the industry with over $30 million in venture capital funding, provides a quick solution to this problem. Using the BitPay platform, the instant a Bitcoin transaction occurs, the Bitcoin payment is converted to a fiat currency. This means if a merchant receives $10 of Bitcoin value, it instantly gets $10 of fiat value.
Instant conversion has led to over 90,000 merchants accepting Bitcoin and a rapidly growing Bitcoin ATM industry. Major brands like Expedia, Dell, Dish Network, Overstock and Virgin now accept Bitcoin. Overstock reportedly processes nearly $15,000 per day in Bitcoin orders and in the first week, Dell received an order for $50,000.
With new merchants joining daily, here are some of the other benefits that are driving merchants to accept Bitcoin:
Reduced merchant processing fees
Credit cards charge fees from 3-5% while Bitcoin processing services charge fees of 1%… and companies like Coinbase offer free processing for the first $1 million in transactions.
Typical credit card processing companies can hold payments for 7-21 days before remitting to merchants. Bitcoin payments are made directly to the merchant’s bank account 24-48 hours after the transaction.
Chargebacks in the United States alone cost merchants $500 billion and consumers over $5 billion. Once a Bitcoin transaction is sent, it cannot be charged back.
Just as a merchant can receive an email instantly and easily from anyone in the world, the same is possible when receiving Bitcoin payments. Bitcoin opens the doors to receive payments from any country without restriction or delay.
New revenue streams
Bitcoin transactions enable a form of payment that is not yet possible with the existing financial system known as ‘Micropayments’. Due to high fees, it is not feasible for a merchant to offer a $1 product online valued at US$1 or less. With a minimum transaction fee of 25 cents and the 3-5% credit card fee, merchants can find themselves paying fees of nearly 30%. Bitcoin enables these merchants to offer products and charge prices such as 10 cents which could potentially open new channels of revenue for businesses.
Previous posts in the LeapRate Top Bitcoin Myths series include: