Bitcoin, the hot virtual payment currency, has gotten lots of press lately. The U.S. government now recognizes Bitcoin as a legitimate payment form, and even Bank of America has given the new digital cash its OK.
Fair enough. But as an e-merchant should you incorporate Bitcoin as a payment method within your site? And how do you do so?
In Part 1, we discussed the attention Bitcoin is getting, and looked at the risks of using it. In this article, we'll share the experiences of several e-merchants who accept Bitcoin payments, so you can decide whether or not to check into Bitcoin further.
Better control through Bitcoin
With credit card processing and PayPal so well entrenched, why should an e-merchant even consider Bitcoin? For Chris Taylor of CustomPlanet, the fact that all Bitcoin payments are final (no chargebacks are possible) is a great selling point.
With Bitcoin, all payments are final. There is no redacting the payment by the evil payment processors and banks
"All a customer has to do is say 'I didn't like it' or 'I didn't get what I wanted,' and the banks support the customer, refund the money and the merchant is out," Taylor says. "With Bitcoin, all payments are final. There is no redacting the payment by the evil payment processors and banks."
Of course, CustomPlanet still accepts legitimate returns, no matter how the customer paid. "In a situation where the customer should have a return, we would definitely give it to them, Bitcoin or not," Taylor says. "We will always do the right thing. Heck, we even do the right thing in the wrong situation, where most companies wouldn't give a refund.
"But, I feel Bitcoin gives us more control over the banks, which we need," Taylor says. "For example, last month we had a customer order 100 basketball jerseys in Canada. Because we shipped to a different address than the credit card billing, the guy was able to call his bank and say 'I never ordered this,' and we were out $1,500.
"I Googled the address and the guy was a screen printer," Taylor continues. "He obviously printed the jerseys and sold them at a mark up. I made the case to our processor, but they claimed the 'billing and shipping address' policy. If this were a Bitcoin transaction, the processor would not have been able to take back the money, as I understand all sales are final."
Being on the vanguard
It's getting harder and harder to be on the cutting edge these days, but embracing a new currency such as Bitcoin is one way to do that. Michael Riley, founder of the website consulting firm Simplpost, started accepting Bitcoin as a payment option a couple months ago. "And it's been great so far," he says.
Riley started accepting Bitcoin because his company began getting requests for a Bitcoin payment option from new users. "I looked into it and setting it up was no problem," Riley says.
Since then, Riley has found other benefits to accepting Bitcoin. "One nice benefit of accepting Bitcoins now is it's easy to get free publicity from sites like Bitcoin Black Friday," he says. "And fans of Bitcoin are very eager to support businesses that offer the option."
But that publicity cuts both ways as the recent failure of the Mt. Gox exchange (mentioned in Part 1 of this series) showed.
Another reason to explore Bitcoin is the ease with which you can incorporate the payment option into your site
"Mt. Gox is definitely a big deal, but it hasn't stopped us from accepting Bitcoin," Riley tells us. "The people at Mt. Gox are obviously incompetent, and were simply trying to shift the blame away from them. They failed to properly update and secure their custom code. The technical issues they tried to blame it on have been known and addressed by others since back in 2011. They simply lost $500 million and don't have any reasonable explanation for the loss."
Riley adds that while the Mt. Gox situation drove down the price of Bitcoin, "anyone accepting Bitcoin should be instantly converting the Bitcoin to their local currency to avoid worrying about those fluctuations."
In fact, Riley is optimistic that Bitcoin will grow back over time. "There are no issues with other service providers, and Mt. Gox going away just means they were too incompetent to survive in this new market," he says. "Survival of the fittest, like any business."
Even nonprofits are using Bitcoin. Jason Shim, of Pathways to Education Canada, decided to include Bitcoin as a payment option "as a way to stay ahead of the curve… as digital payments continue to evolve, we want to be ready."
Low transaction fees
According to the Bitcoin Beginner's FAQ, Bitcoin transactions are usually free, although "token sums" may be included. This is one reason why Braydon Moreno of Robo 3D Printer, also sees Bitcoin as being on the cutting edge in technology.
"The fact that it is an intangible virtual currency, being accepted by the public as a way to barter and trade goods without sustaining hefty fees on either side, is just very fresh and exciting to us," he says. "It is old school in its ideals and simplicity, but new school in its sophistication, utilizing technology for trading; and the security is top-notch."
Another reason to explore Bitcoin is the ease with which you can incorporate the payment option into your site. Simplpost's Riley recommends Coinbase and Bitpay as the two best services to use for integrating Bitcoin payments.
"It really only took a few minutes to set up a basic payment option for our few subscription plans," he says. Riley notes that "both services make it pretty easy to generate the widget code to embed in your site. You just need to input your price, and billing period (for subscriptions). It then generates the code you need to paste into your site. So that only takes a few minutes, and they both have very user-friendly interfaces."
Currency is changing. For new currency to really take root, merchants must embrace it. It may be Bitcoin, or somebody else
Jason Shim agrees that setting up Bitcoin as a payment option wasn't a big deal. "It was pretty simple to set up. To date, we have received about $1,700 in donations through Bitcoin in our first couple of weeks, which has been great so far."
Bitcoins as an investment?
Bitcoins can rise or fall in value, as we noted in Part 1 in this series. So because it's likely very few of your customers will be using Bitcoin for the foreseeable future, you have the opportunity to view your Bitcoin proceeds as an investment.
Robo 3D Printer's Moreno says that his company does not receive a large influx of Bitcoin orders right now, "so we have actually taken our Bitcoin from orders and put it into a Bitcoin wallet as a potential small investment strategy."
(A Bitcoin wallet is simply a digital wallet stored on your computer where you can access the coins you currently own. There are plenty of service providers that allow you to have a Bitcoin wallet, which you access using a specific Bitcoin wallet number.)
"You can also use Bitpay strictly as a payment processor to do direct bank deposits daily where it will sweep your Bitcoin at the Bitcoin exchange rate when paid, and deposit money into your bank account just like a credit card processor would," Moreno explains.
Is the time right for Bitcoin?
As you can see, there's a lot to think about when considering Bitcoin, but we hope we've laid the groundwork for further research on your part—when you're ready. The time may not be right yet, and that's fair. When asked about his plans for accepting Bitcoin, ColderIce's John Lawson said, "It's simple enough to do, but it's really not something that I feel the need to implement yet. As it becomes more mainstream, I will reconsider it."
Whether this is the right time for you to consider Bitcoin or not, it does appear that payment via digital currency will only grow.
"The pendulum is swinging," CustomPlanet's Taylor says. "Currency is changing. For new currency to really take root, merchants must embrace it. It may be Bitcoin, or somebody else. But it couldn't come too soon for us. As long as they keep the 'all sales are final' policy. And the fact that Bitcoin has survived Silk Road, and now Mt. Gox, only speaks to its overall strength as a potential disruption to our current commerce system."