Topic: Retailers Turn Their Backs On Booming Bitcoin: Trade Magazine (Read 1151 times)

...

I'll tell you guys what would be interesting: getting some merchants who ARE using Bitcoin to to tell us and explain why it works for them.

In particular, the merchant I have had the most experience with re buying with BTC is Provident Metals (providentmetals.com), who take BTC (among other payment methods).  They charge about 1% more than the check or wire-transfer price, but less than credit card.  My guess is that the 1% more is because they use Bitpay to accept the BTC and exchange it for cash to Provident.  Perhaps also there is the risk of an adverse price movement within the 15 minute window they give you to pay (though that would average-out balanced by positive price moves in the 15 minutes).

I doubt that many merchants would tell us much, as they want to keep any successful methods secret.  But, merchants who DO accept BTC and other payment methods would do us a great service explaining what works and what does not

Bitcoin’s uptake with popular and leading online retailers has been slow, but since its rapid surge in value and interest recently, it has regressed. Fewer, rather than more, retailers are accepting Bitcoin as a form of payment.

Last year five retailers in the world’s top 500 biggest online stores were accepting Bitcoin according to the publication Internet Retailer, now, however, it has emerged that the figure is down to just three.

Where is the growth?
It is a perplexing discrepancy in the growth of Bitcoin to its acceptance by online merchants, as noted by Morgan Stanley payments analyst James Faucette. He believes that Bitcoin's growth in value is actually a contributing factor to its decline as a functional currency.

Faucette said:

"Bitcoin owners are reluctant to use the cryptocurrency given its rate of appreciation, more evidence that Bitcoin is more asset than currency. Way easier to trade speculatively than convince new merchants to accept the cryptocurrency."

Thus, the fact that people are far happier to hold onto their Bitcoins as an asset rather than a functioning currency means that there is little pressure on retailers to adopt it as another form of payment.

Slow and expensive
On top of this Bitcoin is facing a number of issues that are making it difficult to use in the context of everyday shopping. The scaling debate continues to rage as it became evident that Bitcoin stuttered when too many transactions were pushed through its Blockchain.

Slower, more costly, transactions are issues that would be hurting the retailer far more than the customer. Transaction prices hovering around $5 will have a huge impact on the retailer who has to bear the expenses.

Pricing out
When these fees hit such high levels, they essentially cut out a huge portion of the retail market as it becomes nonsensical to use Bitcoin for smaller, less expensive transactions.

Atlantic Financial founder and a board member at the Bitcoin Foundation Bruce Fenton said in an interview that things like sandwiches and coffees are not viable markets for Bitcoin to operate in because the fee can be more than the cost of the item.

Fenton notes:

"There’s a problem with the fees being so high - it does price out certain things. There are some micro transaction use cases - a cup of coffee is the big analogy everybody uses - that are being sort of priced out just because Bitcoin is going up so much."

Still some success stories
It is not all doom and gloom in the world of retail and Bitcoin though. In Japan, the adoption into brick and mortar stores is on the rise. Recruitment Lifestyle, a retail giant, has implemented a Point of Sale app that is Bitcoin-ready for 260,000 of its stores. Even its popular electronics market place, Akihabara, is on a huge Bitcoin adoption drive.

In the United States, champion of Bitcoin in retail, Overstock.com has said that since it started accepting the digital currency in 2014, it has seen triple the transactions coming through its online doors.

Some of the underlying scaling debate involves the question of Bitcoins ultimate role. Will it be a store of value, or a replacement for cash?

It probably cannot be both. Optimizing the protocol for one function will tend to undermine it for the other function at too many points of conflict. Given that Bitcoin is developing thus far as a store of value, with increasing but volatile value, that doesn't make it very effective as a cash replacement. It is probably better to let other coins play that role. Particularly since a cash replacement will have a high velocity if it is used as such, which will drive down the value of the coin.

well the tx fee war (not bitcoin price) is the real killer.

exactly this.
whenever i want to buy something and i am presented with 2 options of paying with something like credit card (high fees, no privacy, and taxes,...) and also bitcoin (low fees (currently extremely low because no spam), high privacy, no taxes,...) i will always choose the bitcoin option in a heartbeat.

not to mention that there are many options for buying retailers gift cards at very low prices and saving up on a lot of money!

The argument that Bitcoin users are not making payments in BTC because Bitcoin has appreciated in value doesn't make any sense. Because the payments need to be made, either in BTC or fiat. The user can convert a part of his fiat to Bitcoin, and use these coins exclusively for making payments.

Merchant acceptance has always been a side show and will be for a long time to come. It'll be the last thing to properly fall into place. I do appreciate the possibility of spending it directly but most Bitcoin users are hoarding or trading.

well the tx fee war (not bitcoin price) is the real killer.

But as stated in the article, merchants doesn't feel the pressure to accept payment via bitcoin because it's function as a currency is being overshadowed by its appreciating value. So people tend to just hold and and let their money grow instead of looking for ways on how and where to spend their bitcoins.

I personally think it is the other way around, once people have bitcoin and are willing to use it, then merchants will accept bitcoin for the simple reason they do not want to be left out of the action, think of this in the same way as credit cards, at first no one accepted them and now is very rare to find a store that does not accept credit cards.