What is the reason behind the surge of merchants accepting Bitcoin in 2014?

[Lorenzo]

In 2014, a huge number of mainstream companies jumped in and began accepting Bitcoin. The trend seems to have started with Overstock announcing in December 2013 that they were going to accept Bitcoin payments by January 2014. Before then, a few merchants already accepted BTC such as WordPress.com, Reddit, and Kim Dotcom's Mega but no mainstream retailer accepted payments in BTC. After Overstock's announcement, many other companies also announced that they were going to accept BTC payments including TigerDirect, Dell, Expedia, NewEgg, Microsoft, and DISH Network (not in that order).

At first, I assumed it was due to the rise of payment processing services like BitPay and Coinbase which shield merchants against the risk of BTC/USD price volatility by automatically converting any coins received into fiat since the use of such payment processors is something that these companies all have in common. However, BitPay was founded in 2011 and Coinbase was founded in 2012 so that doesn't explain it.

The only other explanation I could think of is that Overstock's announcement of Bitcoin integration provided such a boost to sales that it served as an example to the market and so other companies also followed suit. Their marketing departments saw how services such as BitPay could allow them to accept BTC with no risk to them since they would still be getting the same old fiat in the end. Meanwhile, they would benefit from the positive publicity as well as increased sales from Bitcoiners.

What do you think? Do you think this the only reason or are there other factors at play? And now that accepting Bitcoin is no longer viewed as "groundbreaking" as it used to be, do you think the trend of ever-increasing merchant adoption will continue into 2015 and the coming years or have we reached a plateau?

[Snail2]

It's fashionable and most bitcoin holders are "solvent", I guess.

[Q7]

Well a few reasons I could think of. If your competitor are offering payment solutions in bitcoin, and you are not, then it makes sense to do the same in order to catch up with the trend. Furthermore, accepting bitcoin also helps to promote businesses. For instance, a company which decides to accept bitcoin will get added to the "list of sites" and indirectly that is a free promotion. Bitcoiners will also tend to support by trying out the service.

[Lorenzo]

Well a few reasons I could think of. If your competitor are offering payment solutions in bitcoin, and you are not, then it makes sense to do the same in order to catch up with the trend. Furthermore, accepting bitcoin also helps to promote businesses. For instance, a company which decides to accept bitcoin will get added to the "list of sites" and indirectly that is a free promotion. Bitcoiners will also tend to support by trying out the service.

True, but wouldn't you think that as the list of companies grows, the positive effects become less and less significant? Being the second mainstream merchant to accept BTC is a big deal. Being the sixteenth? Not so much.

[FeedbackLoop]

The main reason might be simply the often ignored ethical sense present in most people, even in people with decision power in companies.

[Lauda]

At first, I assumed it was due to the rise of payment processing services like BitPay and Coinbase which shield merchants against the risk of BTC/USD price volatility by automatically converting any coins received into fiat since the use of such payment processors is something that these companies all have in common. However, BitPay was founded in 2011 and Coinbase was founded in 2012 so that doesn't explain it.

The only other explanation I could think of is that Overstock's announcement of Bitcoin integration provided such a boost to sales that it served as an example to the market and so other companies also followed suit. Their marketing departments saw how services such as BitPay could allow them to accept BTC with no risk to them since they would still be getting the same old fiat in the end. Meanwhile, they would benefit from the positive publicity as well as increased sales from Bitcoiners.

What do you think? Do you think this the only reason or are there other factors at play? And now that accepting Bitcoin is no longer viewed as "groundbreaking" as it used to be, do you think the trend of ever-increasing merchant adoption will continue into 2015 and the coming years or have we reached a plateau?

You are missing something that is needed here. That's is time (even though it is non existent, but that's a different matter). Nobody could expect a big company to adopt Bitcoin, half a year or even a year after Bitpay. Even though they're protecting the marchants, that's not enough. You don't just go around the internet and adopt any payment option that you see. Even today, there is a lot of misunderstanding when it comes to the use of Bitcoin.
Overstock was the first "big" company that started accepting Bitcoin. One could have expected that there would be a boost in sale which stagnated afterwards. This helped out in a way. Everyone who doesn't accept it kind of stays behind and missed a possible market.
I definitely think that adoption will continue, maybe even on a quicker pace. I don't see it reaching a plateau because there are so many merchants in the world that could start adopting it.

[MGMT]

I think it's just a natural progression, but I think there was a disappointing number of big companies getting involved both last and this year. I think the adoption rate will pick up at some point (hopefully) but it's been very slow in my opinion. I think there's much more smaller companies adopting bitcoin and those are just as important in my opinion so we shouldn't forget them.

[Q7]

Well a few reasons I could think of. If your competitor are offering payment solutions in bitcoin, and you are not, then it makes sense to do the same in order to catch up with the trend. Furthermore, accepting bitcoin also helps to promote businesses. For instance, a company which decides to accept bitcoin will get added to the "list of sites" and indirectly that is a free promotion. Bitcoiners will also tend to support by trying out the service.

True, but wouldn't you think that as the list of companies grows, the positive effects become less and less significant? Being the second mainstream merchant to accept BTC is a big deal. Being the sixteenth? Not so much.

For certain business entity especially large corporations, they don't really mind trying to compete even committing huge investment just for the sake of slight advantage over others and that is especially for their competitors. They stay by their motto of staying ahead in business. That is how I see it.

[Lorenzo]

I think it's just a natural progression, but I think there was a disappointing number of big companies getting involved both last and this year. I think the adoption rate will pick up at some point (hopefully) but it's been very slow in my opinion. I think there's much more smaller companies adopting bitcoin and those are just as important in my opinion so we shouldn't forget them.

It's probably too early to know if this year will be a good or bad one for merchant adoption but I'm curious to know why you think 2014 was a disappointing year for merchant adoption? Remember that no mainstream retailer was even remotely interested in accepting BTC before Overstock did so in January 2014 and since then about a dozen other large established companies have started accepting payments in BTC. Or are you referring to the fact that all of these companies currently use a service like BitPay and don't directly handle the coins themselves? That's understandably quite disappointing but I can definitely understand their reasons for doing so. After all, businesses have expenses to pay and 99% of the time these must be paid using fiat currencies.

[countryfree]

Merchants just want more sales. If BTC can bring more business, it's good. Besides, I guess it's quite fashionable too, and it doesn't cost much to implement, so let's do it.

[ScreamnShout]

Yes it seems like a trendy alternative and there is already apps that can take payments for it so very easy to access.

[ebliever]

I think the obvious reason was that in late 2013 the price of bitcoin rose to over $1000 USD, making it a big deal in the headlines and capturing a lot of attention. That translated into companies taking a couple months to look at it and figure out how to implement acceptance of bitcoins, which has been proceeding since then.

Unfortunately they've been very short-sighted about it and used "We accept bitcoins" as a cheap marketing ploy, rather than demonstrating a serious commitment to it. If they were serious they'd have shared the cost savings of using bitcoin with their customer base, giving customers an actual reason to use bitcoin.

Instead, with companies that accept bitcoin I now have a choice:
1. Pay with bitcoin and get zero discount. The merchant gets all the benefits - immediate payment, no counterfeiting, bounced checks, chargebacks, armored car costs, etc. But customers have little incentive to use bitcoin with them.
2. Pay with credit card. This gets me a 2% discount (minimum) due to the rewards cards I universally use. I don't actually pay from my bank account for 30-50 days following the transaction. I can jerk the merchant around with a chargeback if I wanted. The merchant pays 3% or more in fees.

Merchants, you are doing it wrong.

[ajaxmoor]

I would say it is probably to expand their customer base and save money on payment processing companies. Back in 2013 and before bitcoin wasn't too booming, and now after the wide adoption, people with bitcoin would tend to use their services and products and would use bitcoin to pay.

[oblivi]

They may have intelligent people on their ID departments which noticed Bitcoin and thought it would be dumb to not be pioneers into the future. Plus it takes literally 0 effort to accept.

[maku]

-snip-

What do you think? Do you think this the only reason or are there other factors at play? And now that accepting Bitcoin is no longer viewed as "groundbreaking" as it used to be, do you think the trend of ever-increasing merchant adoption will continue into 2015 and the coming years or have we reached a plateau?

Of course not. We are far from reaching limit of retailers and companies accepting bitcoin. That is for sure. That list you presented was just an introductory example. I predict that if some really big fish will accept bitcoin i.e. Walmart or Amazon we would be seeing domino effect on a large scale.

[manselr]

-snip-

What do you think? Do you think this the only reason or are there other factors at play? And now that accepting Bitcoin is no longer viewed as "groundbreaking" as it used to be, do you think the trend of ever-increasing merchant adoption will continue into 2015 and the coming years or have we reached a plateau?

Of course not. We are far from reaching limit of retailers and companies accepting bitcoin. That is for sure. That list you presented was just an introductory example. I predict that if some really big fish will accept bitcoin i.e. Walmart or Amazon we would be seeing domino effect on a large scale.

I don't understand the notion of of "limit of retailers". Why does it have to be a limit of retailers anyway? every person in the world could accept Bitcoin in their business if they wanted to.

[lucasjkr]

I doubt that Overstock received a huge increase in sales due to BTC acceptance.

IT doesn't matter when Bitpay and Coinbase were founded, BTC wasn't seeming like it was reaching a critical mass until 2014. In other words, if you brought up Bitcoin to overstock in 2011, they likely would have expressed zero interest.

I think many companies moved to start accepting Bitcoin in 2014 because there they saw it in the news, they saw legitimate finance people talking about it, AND they probably discounted the number of "hodlers" that were out there... They probably moved to accept Bitpay thinking that people with Bitcoins were eager to spend them, much generally doesn't seem to be the case. Not even to spend them if only to re-up a few minutes later.

I wonder how much longer many of those companies will continue accepting bitcoin for, actually.

[dhimasnk]

I do not know, hopefully in 2015 will also be a lot of companies are using bitcoin as a payment system, as well as utilizing bitcoin as a main job

[jjacob]

They found out it is great publicity, no risk (because of payment processors) and probably doesn't cost much to implement.
Whenever a company decided to accept Bitcoin, it definitely stayed in the news for a few days.

[randy8777]

it's not only publicity, but it is also much better and safer than other payment options.
it's a first step in the right direction.