The new crytocurrency Bitcoin may not be for everyone, but could it change the way we pay online?
By Anna MacLachlan (Copywriter and Content Strategist, Revel Systems iPad POS)
Bitcoin, the much-talked about cryptocurrency, has long been held as an online currency. Made infamous by the nefarious online dealings of Silk Road, Bitcoin has come to signify a clandestine and online-only currency. And it doesn’t appear to be leaving the public consciousness or investor interest anytime soon – Bitcoin has been on the rise in the weeks leading up to the auction of 144,000 Bitcoin seized from Silk Road.
Image courtesy of CoinDesk
Just as Bitcoin has gained traction with investors – including venture capitalist Tim Draper, who purchased the entirety of the auctioned Silk Road Bitcoin on July 1st – so too it remains in the public consciousness as perhaps a high risk yet attractive idea.
What if Bitcoin were more than an online, clandestine method of payment? What if it (or something like it) became the standard for how we pay, online or in-store? Bitcoin – or cryptocurrencies in general – does not need to be relegated to the digital world alone. With its rise in popularity, it would seem only natural that Bitcoin would enter the realm of the brick-and-mortar store.
In-Store Mobile Payments
Paying with mobile devices is more popular than ever, with 4 out of 5 consumers shopping on their smartphones. And, according to one report, “78% of respondents are interested in using their smartphones while shopping.” Mobile payments appeal to shoppers as well as shop owners – the former receives incentives such as mobile coupons and rewards, and the latter new tools to market their wares. Mobile POS proximity payments (in-store payments with mobile devices) have grown 118% per year over the last five years, and 50% of smartphones users predict they will use mobile wallet by the year 2017.
Image courtesy of Merchant Warehouse
Image courtesy of Merchant Warehouse
As more consumers turn to their mobile devices for payment, they’re also looking for more secure ways to pay, with security being the primary concern related to mobile payments for 28% of respondents. Bitcoin addresses both the trend towards mobile payments and the need for security – According to CoinDesk, Bitcoin transactions, unlike credit cards, “don’t require you to give up any secret information.” Instead of swiping a credit card or entering payment information in-store, shoppers can complete secure transactions simply by scanning a uniquely-generated QR code with their mobile devices. While Bitcoin may not be everyone’s preferred mode of payment, it is perfectly situated to take advantage of both mobile payment trends and the need for security. And, with more and more merchants accepting Bitcoin both in-store and online, it’s easier than ever for progressive shoppers to pay with Bitcoin.
Benefits to Merchants
We’ve established that Bitcoin has an allure to consumers – indeed, it has a practical as well as viral appeal, giving merchants more ways to sell their wares as well as an excellent marketing tool. In addition, Bitcoin offers the following benefits:
- No fees: Bitcoin exchange Coinbase offers 0% payment processing, enabling merchants a low cost and effective way to accept payment in-store. Some stores, like Five Markets Grocery in San Francisco, opt to convert bitcoins into dollars automatically to minimize risk. Converting Bitcoin to local currency is also free on Coinbase, up to the first $1,000,000 in transactions, after which a 1% fee is charged.
- No chargebacks: A chargeback, which is a return of funds to the consumer, often results in fines for the merchant in addition to loss of funds from the transaction. Bitcoin places liability for insufficient funds on the payer, rather than on the merchant (the opposite of which is true for credit cards). Once a Bitcoin payment is received, merchants don’t need to worry about it being challenged or reversed.
Easy. With the right point-of-sale, accepting Bitcoin is easier than ever. Tablet-based models are ideal for both cost and ease of use – merchant accounts are easy to set up, and with tablet-based POS systems customers can pay for items simply by scanning a QR code, as shown in the photo below.
Image courtesy of Forbes
Although Bitcoin may not be for everyone – or, indeed, may not be around forever – it does pose an interesting question for the future of payments. As the mobile, connected self merges with the in-store experience, merchants can look to Bitcoin – or other forms of cryptocurrency – to meet the demands of consumers while improving the bottom line.