Bitcoin's concept of anonymity is a hot target for the greedy. Its structure helps criminals do their criminal acts. They can easily participate on illegal transactions without being traced (or a high possibility of not being traced) by the authority. Decentralization also helps them in accomplishing some serious thefts and laundering because nobody has the power to freeze their money unless they're traced by the government. This is just one of the many things why merchants all over the world doesn't accept the idea of using bitcoin into their business. It seems to risky for them to touch knowing that there are many possibilities that they can be victimized by theft and frauds.
Step 1: Company registers with BitPay.
Step 2: Nothing. In one step, the company has now avoided any issues with potential fraud, theft, and even price volatility.
Conclusion: "Risk" is a poor reason for a merchant to decide not to use BTC because payment processors like BitPay eliminate the risk.
I generally agree, although I would point out that there's still some risk. I don't know all of BitPay's terms and conditions (or Coinbase's), but I'm guessing that they can't guarantee the exchange rate if they have technical difficulties. On the surface, this would seem like a very minor issue that would likely have little impact, even if it happened, as it would likely be short-lived. However, the greatest chances of having such problems usually occur during times of exceptionally high volume, such as during a crash.
I'm not exactly sure how they do it now, but I believe BitPay used to take data from the top 3 leading exchanges in terms of price, rule out the third, then average the top two (I always thought this was strange since ruling out the third would be unnecessary if you just looked at the top two, so I'm guessing there's a chance I misunderstood something).
I suppose there may be a window with a duration of a few seconds during which extreme volatility still might lead to a nasty surprise for the merchant, but I'm not so sure about this. Whenever I send BTC to my BitPay account, I usually receive notice of my deposit credited as USD within about 3-5 seconds (via both an SMS text and an email). I'm not sure what happens during these few seconds, but the window for risk seems *exceptionally* small, if there is one. And, in the event of some technical difficulties on BitPay's end, I'd imagine they would eat the loss if such difficulties were to occur.
Merchants also have the ability to set the ratio of BTC they retain. They could, for example, choose to receive 100% of the converted BTC value in USD, or they could choose to retain 100% BTC, or any ratio inbetween. This would allow a merchant to cash out manually at the time they choose, though I don't see how this would give you any more advantage at avoiding loss due to volatility than by letting BitPay do the conversion automatically.
I think the chances of accepting a bad check would far outweigh the chances of loss due to volatility while using a payment processor. There will always be a hypothetical scenario for risk involved with accepting any currency, but this method of accepting payment seems less risky than many others.
I don't know all the ins and outs of BitPay and Coinbase, either, but my guess is that they protect themselves from quick, small price movements using a greater spread between the buy and sell prices. That and/or they may make sure that they match up buys and sells appropriately by locking in the price for a (probably short) period of time. At least on Coinbase, they don't show you the market depth, so they can probably toy with things as they need to in order to make sure that they don't lose money.
I agree that under the vast majority of circumstances, exchange value loss shouldn't be a problem. So let me explain a little better. I wasn't into bitcoin during some the craziest run ups and crashes last year, so I don't know how robust the exchanges are. But in the stock and futures markets, for example, during times of exceptionally high volume (e.g., flash crashes), I've heard that the computer systems can become overwhelmed, which can lead to much longer order execution times and possible system crashes. Didn't Mt. Gox have major issues during one of the run ups/crashes earlier last year, such that it took minutes or hours for orders to be executed? If that kind of thing happened during a major crash--if it took an hour to execute your trade, or worse, the severs go down--you could easily lose 10-20% or more of the exchange value of your coins. The odds are very small, but the loss potential is pretty high.
