Bitcoin Forum

Just ran across this article on how Overstock is not getting as much revenue as they expected with bitcoin:

http://www.coindesk.com/overstocks-2014-bitcoin-sales-miss-projections-3-million/

No one should be surprised. Merchants have been loudly announcing they accept bitcoin all year. And it makes sense for them to accept bitcoin. No chargebacks, forgeries, counterfeiting, no chasing after customers with collections agencies, etc., etc.

But they can't answer one stupid question: Why should I pay them with my bitcoin when I can pay them the same price with a credit card that gives me 2% (or 3% or 5% with my 2nd and 3rd cards right now in certain categories) cash back and allows me to defer payment ~45 days?

Merchants need to get serious if they expect to pick up actual revenue in bitcoin and gain a real advantage against the competition. Offer something like a 5% discount on BTC purchases, sharing the savings they enjoy using BTC. That would give people an actual incentive to accumulate and use BTC. Instead they are treating it like a short-sighted marketing gimmick.

Actually what you brought up has a point. Instead of letting the credit card companies impose at least a 3% deduction out of the selling price why can't they charge the same selling price and then use the 3% as a discount that goes to the customers that pay in bitcoin. Or is there any restrictions based on a merchant's point of view...

Not sure if they are allowed to treat credit card customer's differently, there must be some policy that says you can't charge extra if your customer is paying by credit cards.

Very great points. 

Although I will probably be purchasing stuff at Overstock with Bitcoins shortly here for xmas mainly due to funds.

IF I could get a better discount all the merrier.  How do you think you could convey this to companies accepting Bitcoins?

I thought they had a sale for a while giving a 10% discount if you use bitcoins.

Maybe that was another site.

The actual problem is, I think, the small number of payment processors.
The merchant wants to sell the product, get fiat, pay the taxes and move on.

Some merchants thought that bitcoin is a nice thing to invest in and now they were scared off by the price decline. But most of them just need some solid payment processors.
Just my 2 satoshi.

I seem to recall Tiger Direct doing this for a short time. That was a good idea to make a big splash, but what I had in mind was a more or less permanent discount reflecting the advantages BTC offers. When people asked about it, they'd be educated into the advantages of BTC and that would persuade more people into using BTC. Too many people still view it as either a nerd/geek thing or a drug/crime thing, and tune it out.

Well, I was hoping a few might notice my post here.  ;D

And if readers can share/spread this it would surely help. The basic logic is simply this:

1. BTC offers substantive advantages over fiat/credit cards/checks for merchants.
2. Customers need to be enticed to use BTC with those merchants by offering better terms than those offered by credit cards, etc.
3. Thus, merchants need to take a look at the savings associated with BTC and find a discount point that protects their profits while giving customers a reason to spend with BTC over other alternatives.

More bitcoin processors would help, because the competition between them will reduce the costs of converting between BTC and fiat. But I think there is already enough competition in this area that it is not the show-stopper.

By policy I assume you mean law, since a company policy can be changed by the company itself. I don't think there are laws (at least not generally) that would prevent a company offering a bitcoin discount. For example, don't gas stations in some places offer a different price for paying for gas with credit cards versus cash? It would be the same idea.

If I were a merchant, there is no incentive for me to accept bitcoin. Payment gateways charges the same fee as credit card companies and bitcoin sales account for too little of my total revenue.

Chicken & Egg problem.

Let them ask for Bitcoin first then, we will integrate Bitcoin.

Doesn't Gyft give triple points for paying in Bitcoin? Maybe Overstock could have some kind of rewards program like that.

The price volatility is part of the problem. They're keeping that 3% that would normally go to the payment processors for credit cards, as a safety net on the price dropping before they can convert it back to USD. If the price per BTC were higher, then a move in price would be negligible (probably less than 1% in any given day), and thus it would be safer for them to offer discounts. We need to stabilize above $1000 per BTC before you see any discounts. 

Is not that creditcard owner pays extra. it is btc users pays less.
If working with btc for for merchants have advantages they should do everything they can to hook customers on it.

True.  Everyone talks about how Bitcoin has no merchant fees, but they have to pay to convert BTC to fiat, pay for development costs or integration with a payment processor, and worry about the exchange rate.  With credit cards, fees and chargebacks are known and built into the cost of doing business.  With BTC, they're not as well known.

The advantage for Bitcoin is not retail sales.  It's person-to-person payments, long distance payments, micro or mass payments, and high risk businesses where credit card fraud is a big problem.

My understanding is the conversion fee is around 1% with processors like Bitpay, and this is where increased competition may help. But this is less than credit card fees. And multinational companies often have to convert fiat from one currency to another anyway, with similar costs and risks.

The cost of integrating BTC exists, yes, but that's true of accepting credit cards, money orders, etc. as well. You say the "cost of doing business" with CC is built in, and that's just the point - why should bitcoin users be paying higher prices that were built in to cover the costs of credit card fees and chargebacks?

I agree with you that long distance payments, remittances, and so forth are also good uses of BTC, but I also think there is huge potential for crypto to supplant credit cards and other payments in general. But before that happens merchants who accept BTC need to look at the results. If the results so far confirm that savings potential of using BTC, then the need to provide incentives to the customer base to switch.

Long term it just does not make sense to me that I would continue paying with CC for most things. But I'll choose the most rational/efficient method of payment from my (customer) perspective. Maybe I'm just being impatient, but I've been waiting all year for the efficiencies of crypto to be reflected in merchant policies.

I suppose it might have something to do with Bitcoin value fluctuates.

I mean they could sell something of $100 dollars as Bitcoin, 2 days later that same amount of Bitcoin could be worth 5 dollars(granted it works the other way too).

But I am guessing that has something to do with why they don't offer discounts to people who purchase in BTC

smaller merchants often do offer discounts for BTC, larger ones offer occasional promotions like newegg offering 10% discount for a promotion.

Many brick-and-mortar shops don't accept CC at all (in UK) due to high fees (they do accept debit cards tho), or have a minimum purchase amounts set for cc payments. So I don't think it would be any sort of illegal 'discrimination'.

Either way, you can just do it as "discount for paying BTC", not as an extra charge for using CC. Like the Newegg and others did.

As for Overstock, $3m sales in bitcoin is actually pretty decent result if you ask me. Their predictions were just too optimistic, that's another story.

I think bitcoin discounts are just a matter of time. So far all the (large) businesses could get all the love from the community just by mere fact they started to accept bitcoin, they'll soon realise that in a long run - that's simply not enough.

inflationary currency where the value decreases each year (bank notes) naturally makes people want to spend it as soon as they get it.
after all if you can buy 5 loaves of bread for $10 in 2013.. you dont want to save it under a matress knowing it will only buy you 4 loaves in 2014.

bitcoin is a medium of exchange, but its attributes are more aimed at "savers", basically people that want to earn a wage and know they are securing their future by keeping a small amount of it as savings for the future, rather than spending it all as they know it has less future value.

i get paid in bitcoin and although i use bitcoin to buy stuff. i personally prefer to spend any FIAT i may have laying around far before spending my bitcoin, because as i said fiat has less future value.

many times i have bought a PC or something and then months later seen that the 3 bitcoin spend on a PC in 2013 turned into a whopping $3,600k value at xmas 2013 or a $1050 purchase today........ far more then the retail price of the PC.

the lessons people need to learn is to save bitcoin and then use the bitcoin from previous years to buy this years products. EG i was getting 60 coins a week in 2012 and that made me happy to spend just 2 bitcoins a week this year. we will see those hoarders of this year start spending their bitcoins next year once the deflationary nature of bitcoin kicks back in (bitcoins flat volatility this year, meandering around $350-$450 all year has stagnated bitcoins deflationary nature) so its a waiting game.

that said merchants like overstock need to realize a few things:
1. their product categories are not weekly spend consumables. they sell computers and stuff that people only replace once every few years. so those customers who did buy something at the start of the year, probably wont be coming back for a few years.
2. merchants like overstock who hoard coins anyway, need to realize that its not costing them a single penny to have the payment service for bitcoin available. so even if they only have 1 customer a month. overstock does not need to be paying large subscription fee's even at times of no custom.
3. once grocery stores accept it, and people get paid it as a wage (closing the loop of acceptance) it will move into the main adopter/mainstream stage
4. bitcoin is still young, like a toddler, it's not yet at the stage of being part of society. so just wait and see and things will start growing

i personally live on bitcoin (my income is 100% bitcoin and i can spend it to buy food, clothing, rent etc) once a larger group of people are true 100% bitcoiners, then merchants should see a increase of spending but should not be expecting 1million customers a month if they are not merchants selling 'weekly consumables'.

grocery stores and landlords will see more spending occur as oppose to the once a year product purchase and i know for sure that the grocery stores, and food outlets that do accept bitcoin DO see regular customers. purely because their product category is a daily/weekly consumable

+1 for this. Until people will not "sell" their work for bitcoins (e.g. get their wages in bitcoins), BTC will never become mainstream. There is no reason to spend fiat on bitcoin, pay some fees, then buy something with those bitcoins, and then end up paying more than you would have paid with fiat in the first place for that product.

Overstock isn't paying anything like 5% on credit card transactions. People running a business out of their parents' basement pay 5%. Big companies pay around 1%.

No, of course credit card fees by themselves are not 5%. But that was just an example, and the actual savings a merchant enjoys from BTC would involve accounting for not just the up-front fees but dealing with chargebacks, credit card fraud, not to mention forged checks and counterfeit money, armed guards and transport for cash, and so on. It might be a little higher or lower, but I'm guessing that for many businesses 5% would be a reasonable target.

Impossible, even if a company owned their own bank they still have to deal with interchange fees which vary greatly but are around 1-2.2% just for the INT fee alone.


The total fees are very complex and variable -
http://www.cardfellow.com/blog/credit-card-processing-fees/
Assessment fee, INT fee, APF fee, TIF fee, FANF fee, Settlement Network Access Fee ,Kilobyte (KB) Access Fee,Misuse of Authorization Fee, Zero Floor Limit Fee,Zero Dollar Verification Fee, International Service Assessment Fee, International Acquirer Fee, ect....

It really is a complicated nightmare...

large companies pay between 2-2.5% total per transaction when you add up all the fees and that doesn't include the expensive costs of chargebacks and fraud which are mostly eliminated with bitcoin.

They are probably not paying 5% to process credit card transactions, but they are not paying 1% either, it is probably closer to the 2-3 percent range, which is generally standard within the industry.

You also need to take into account the fact that there will be credit card fraud which will be an expense above the processing fee, even if they can defeat any chargeback claims, they will still need to pay an employee to fight these claims

I agree with you to a point.  But business that accepts Bitcoin are also taking a risk.  How do they know that Bitcoin will maintain and value will hold.  When you look at it purely at numbers its hard to say it.  Now they could get the Bitcoin and sell it right away.  But then they are probably already taking a transaction hit so they can't offer tons of rewards.

merchants are getting onboard, consumers are the problem.

Bitcoin is still seen as invesment rather than something you pay with by the majority.

The only case Bitcoin is being actively used by people is with gambling.

Stable price would contribute to the spending habits of people.

If Joe buys 1BTC for $450 and a month later 1BTC is worth $200 then of course Joe will not spend his Bitcoin.

This.

Many perceive "Buy & Hodl" as the only right thing to do. But that's a road to nowhere. Why not keep a portion in secure deposit (cold wallet) and actively use the rest...


Stable price would probably be helpful, but it's not necessary. Joe would buy with his $200-worth bitcoin if he got the incentive from the merchant (discount), he could then buy BTC back and still be better off than paying with fiat.

But what would really increase bitcoin spending is if more people had some sort of steady, regular income in bitcoins. Doesn't have to be the main salary, but any additional BTC income would help a lot.

Well said! People like you makes bitcoin a better currency,
and ultimately, the world a better place to dwell in.

You hit the nail directly on the head.
Spending of BTC on weekly consumables is the KEY to mass social acceptance of BTC.

Once this happens(and it will happen)the flood gates will open.
I just hope the middle class and poor people of every country wake up soon enough to take advantage of the eventual redistribution of wealth...

How much BTC are overstock, or any vendor keeping in their wallet?  That is an interesting question.  If you are using it and then they are selling all the BTC to exchanges instantly it isn't that much different than buying it for cash.

Just about every truckstop in the US has a discounted price for diesel when you pay cash.

Similarly many local shops in UK would have minimum amount policy for credit card payments. Even the government's DVLA has some small charge when paying with credit card for vehicle tax (free for debit cards) iirc.

If its a big business, they probably sell it instantly, and that alone is basically dumping the price, as people don't buy for the purpose of selling .But people who already own are the ones who sell.

It is a big business, but Overstock is slightly different. I think they mentioned somewhere that they don't sell 100% of bitcoins received.

Anyway, Overstock's CEO, Patrick Byrne, is very bullish on bitcoin.

http://www.forbes.com/sites/kashmirhill/2014/02/21/for-overstock-ceo-bitcoin-isnt-just-a-publicity-stunt/ (http://www.forbes.com/sites/kashmirhill/2014/02/21/for-overstock-ceo-bitcoin-isnt-just-a-publicity-stunt/)

That's pretty darn stupid of Joe. Even if he's got his bitcoin as investment, rather than spending money - what do you think will help raising the value of his precious bitcoins more:

1. Hodling his 1 BTC and spending $200, thus only stimulating the USD economy

or

2. Spending his 1 BTC, thus stimulating the BTC economy, and immediately buying a new one for $200 on an exchange (or circle or whatever), thus increasing demand for Bitcoin on the market.

Notice that the end result is the same for Joe: he purchased $200 worth of stuff, still got 1 BTC, and is short $200.

I really don't understand why even the most fanatic Bitcoin owners don't seem to get this.

Especially if you're a Bitcoin fan, believer, enthusiast, investor, or hodler, SPEND THEM! (And immediately refill your stash of bitcoins by buying new ones with fiat)

You would rather call it a gamblers fallacy, that the price can't go lower . Thats what most of the people holding bitcoin have the mindset about .

You're missing the point. In both strategies I suggested, Joe is essentially keeping his Bitcoin. Except with number 2, he is actively helping to raise the price level, on two ends (bitcoin economy, and market demand).

If Joe does think the price will go lower, then he's better off spending his BTC anyway (now that it still buys him $200 worth of stuff), rather than spending $200 and keeping his BTC.

I'm a merchant. It's been over a year since I started offering 15% off any order paid for with Bitcoin.

Not a single customer has paid with BTC - everyone just uses PayPal/Credit card. Several people have said they will check out BTC, but then they always pay using a traditional method. It's important to note however that my customer base is niche, middle aged and affuent.

But then I remember when McDonald's didn't take credit cards. I was a teenager I think before they started doing that, and they'd been in business since the 1950's.

Or, better yet, he buys more- thereby decreases his cost per Bitcoin.
He bought one for $450.
Goes out and buys 4 more @ $200/each. Essentially, he bought each coin for $250/each (1250/5).
BTC could make that kind of value back at some point on any given day.

it still doesnt make sense to pay $450 for a btc and spend it on a hookers and blow  a month later when its worth $200 ,
if you have $200 in cash use that to pay  the hookers and blow and hopefully the btc will go back to $450+
most people are not interested in taking a personal loss just  to stimulate the bitcoin economy ,thats the reality

What kind of business do you have?
If I would get 15% discount, I would definitly look into it, regardless of what it is.

But had they bought at $450, then BTC goes up to $700, he's in a better spot....doesn't matter.
You missed the point that if an individual buys in at a price point and valuation drops, they have an opportunity to buy more at the lower valuation, bringing down the overall price per eact BTC that they had purchased.

I am sure one reason why merchants aren't so serious about bitcoin is because they probably don't have lot of people using bitcoin to make purchases, and their main aim is to make money, not promote bitcoin.

Again, by spending 1 BTC on hookers and buying one back right away (at $200), rather than just spending the $200 on hookers, you are:

1. NOT taking any personal loss whatsoever (you already took that loss when buying 1 BTC at $450 and it dropped to $200)
2. Actually helping to recover your loss by stimulating the Bitcoin economy, rather than hodling and merely "hoping" the price will somehow magically rise to $450

Remember: by just sitting on your coins, instead of using them, Bitcoin won't grow! Spend them, and buy back at the same time.

Where I live certain places charge more depending on certain cards because of credit card fees. I've even seen some online shops charge more for people to pay via Paypal because their fees are so steep. Bitcoin's small fee are a major advantage to retailers but it's just educating them about it.

Merchants likely aren't serious purely down to ignorance, though there needs to be a big demand from the public also and there's only a tiny minority using bitcoin at the moment so there's not too much advantage for them. Hopefully this will change overtime, though.

But any advantage they do get from it is free. Publicity, new customers (even though it probably won't be much yet, depending on area and type of business), for free.

There isn't a single disadvantage in using Bitcoin for merchants: no investment, no costs, no chargebacks, no volatility, no fraud risk, nothing!

i understand what you are  saying but i am already a bitcoin enthusiast
people who are not converted yet think its a $450- $200 is $250 lost + exchange fees as its not always free to use banks to credit exchange and  get bitcoins , charges vary depending on what country you live in and which exchange you need to use for whatever reason

Merchants are scared of Bitcoin's extreme volatility plus its still too experimental for them to massively adopt, slowly they willget it tho.

The simple answer is that they have yet to be provided the proper motivation to seriously consider BTC.

That is more or less a failure of marketing.

Very good point.
If I will be merchant, right now I will be very scared to accept bitcoin as payment tool for my services/products.
For example, if I sell something for 10 btc and 1 btc is let's say 200 usd, and value of btc suddenly drop to 150 usd, I will loose 500 usd because of this value instability.
Very bad for any business.

In the end it's all about fiat money. Most crypto investors want to make a profit and when the price is high enough they turn their back and exchange for fiat. 

Lots of reasons that are mentioned here are great why merchants are not serious. 

I really like the comment about all about Fiat for these business, it is, they can't hold onto Bitcoin and hope that the value goes up.  They can probably keep a small amount of coins but they need the money to pay for their crap

But if they're scared of this they can use a payment processor which automatically converts the coins to cash and deposits it into their bank account. This isn't an excuse really for this exact reason.

actually quite the opposite.  some states have passed legislation that allows merchants like restaurants to charge up to 5% more for buyers using credit cards.

Why would you think that?
I think merchant adoption has been stellar, if you consider the vol we have had

Yes, but is that what is killing the value of Bitcoins?  I think it might be because I think they are selling right now.

the problem with microsoft ,dell ,overstock ,newegg etc is they sell a lot of equipment people dont buy often
i have dell laptops that are years old running 24/7 and i buy an up to date new one every 3 years or so

its things i buy everyday or every month  that are not accepting bitcoin yet ,like fast food ,gas/diesel  ,coffee ,
groceries ,bus ,train tickets,taxis  ,phone ,utility bills

i think when these places catch on we will see a lot more adoption  but in turn these places will have to give something back
to the customer for using btc or they will just use simple cash

discount or reward points of some incentive to buy btc and spend them is what they need ,at least in the beginning they should
give back whatever % saved by not using credit cards and not having to worry about charge backs etc

sales will be final and fraud from stolen credit cards  and chargebacks etc will be zero so there is good incentive for the merchant if they can be bothered
to learn about btc and use it  ....

I think another reason is tons of people probably bought Bitcoins when they were much more expensive.  If the price jumped up to say 1200, I would bet every business would see you a huge raise in the amount of Bitcoin purchases. 

My complaint is not with the number of merchants accepting bitcoin, but with their failure to capitalize on its use. Bitcoin provides cost savings to merchants who accept it in the form of lower fees and costs associated with other forms of payment (bounced check fees, arguing chargebacks, hiring armored cars to carry away cash, and so on).

Consumers like me get rebates and points and so forth using other payment systems like credit cards. So we need an incentive to switch to bitcoin. Since the merchants are indirectly paying for my rebates/points/etc with the fees they pay to financial middlemen, it makes sense for them to offer a discount to consumers paying with bitcoin. They should be able to hit a sweet spot where the discount is less than the amount they are saving, but more than we consumers can get using alternate forms of payment.

Do that and bitcoin use will explode.

because they know it won't last