How are 3rd world merchants supposed to accept bitcoin?

[Seth Otterstad]

3rd world merchants cannot accept bitcoin unless they want to hold bitcoin.  BitPay will not send wire transfers to countries they do not support.  BIPS will do it for $7.50, but the merchant will get hit with an incoming wire fee, plus fees by any intermediary bank that touches the wire, plus a currency conversion fee, which is too expensive considering the level of bitcoin commerce that goes on in the 3rd world.

I could offer to act as an exchanger here in Costa Rica and buy all the merchant's bitcoins for cash or bank transfer once per month , but the merchant will be taking a big exchange rate risk this way.  I would have no problem settling up after every transaction, but then I may as well just hand the merchant cash in the first place.  I can promise to eat at restaurants many times per week if they agree to accept bitcoin, but I need some options to have a good sales pitch.  What are some payment processing options, and how should the merchant physically accept the bitcoin purchase when the he doesn't have any smart devices?

[justusranvier]

Ultimately international bitcoin trade has to move beyond fiat settlements and into commerce.

Here's an example of how such a flow could be set up:

http://bitcoinmagazine.com/beef-and-bitcoin/

[vokain]

I guess it would have to start out by virtue of the idea that you can still exchange the bitcoin for something from someone else later, even if at first it means you have to import something with bitcoins from out of the country. Perhaps this idea will extend to at least one other person in your country that sees that and will accept your bitcoin. from here, it's all pizza

[westkybitcoins]

Ultimately international bitcoin trade has to move beyond fiat settlements and into commerce.

Here's an example of how such a flow could be set up:

http://bitcoinmagazine.com/beef-and-bitcoin/

That sounds like a viable workaround to some of the problems with strictly-regulated economies. It would be great to see something like that spring up in Argentina.

how should the merchant physically accept the bitcoin purchase when the he doesn't have any smart devices?

Either the merchant or the customer has to have a device allowing some sort of internet access; even trading Casascius coins or bitcoins stored in private keys printed to paper requires checking the address to make sure it is actually funded.

If the merchant is relying on the customer to have a device to send the transaction, then one way to accept the transactions is to pre-print the payment addresses. The merchant can generate a few thousand payment addresses onto paper (or ask his service provider to do so.) Each paper could have a QR-code of the payment address, the full text of the address (in case the customer has to actually type it in) and an empty space for jotting notes. The merchant shows the QR-code to the customer, watches him send the bitcoins, then jots down any important info (amount, item sold, etc.) in the blank area. If the number of customers spending bitcoins is small enough that it won't create difficulty with the accounting, the merchant could instead have a permanent payment address on a nice display next to the register, and ask the customers to make their payments to that address.

Granted, it would be far better if the merchant could at least check the blockchain to verify that the transaction has been sent; but if that's simply not possible, then at least this would allow honest customers to make purchases, even if it allows for thieves to merely pretend they sent the coins.

[yayayo]

Ultimately international bitcoin trade has to move beyond fiat settlements and into commerce.

That's what Bitcoin should be about: Making fiat obsolete.

The more essential goods are available for Bitcoin (even if only on a regional level) the less fiat will be needed.


ya.ya.yo!

[Kouye]

BIPS will do it for $7.50, but the merchant will get hit with an incoming wire fee, plus fees by any intermediary bank that touches the wire, plus a currency conversion fee, which is too expensive [...]

You just sumed up why 3rd world merchants need to switch to BTC quick, and flip their biggest finger to banks.
Not to mention that currently, most of the fiat charity coming from EU or US probably feeds army and/or governments - even if not directly, diamond laundry works very well, for example.
This can be disrupted, too, thanks to peer-to-peer payment.
Most "3rd world" countries could become important actors, if they were not leeched off.

[Super T]

You should read up on Kipochi, a company who announced a partnership with M-PESA last month.

M-PESA are a provider of mobile phone based fiat payment account services in several African ad Asian countries (e.g. Kenya), operating in a market where relatively few people have access to traditional bank accounts.  More people in Kenya are estimated to use M-PESA than traditional accounting services.

Kipochi make it possible for M-PESA users to easily convert balances into and out of Bitcoin (i do not know what fees are charged for this but have seen them referred to as very low in a few places).  The benefits of bitcoin conversion are instant international transferability of funds to/from people outside the current M-PESA network and the avoidance of further M-PESA transaction fees (if any) once funds are in bitcoin (plus some speculation or hedging value if required).

It is tie-ups like this that have the potential to catalyse explosive growth in the bitcoin user base, particularly with the comparatively low overreach of regulation in such communities.

Of course - the real solution is not to require conversion back to fiat at all, but this requires a critical mass of adoption, something which is far more likely to occur in communities such as those in Africa where the majority of people are already primed for simple phone based payment technology, and where the advantages of very low fees can be tremendously important.

[EscrowBTC]

This could work or no. Think like this:

Maybe, some buyers don't use bitcoins.

Anyway, the idea isn't wrong. But the merchants should remain in profit.

[Seth Otterstad]

I thought of one solution for the exchange part.  The merchant can make a bitstamp account, print a QR out his deposit address, and sell the bitcoins whenever he gets them.  The merchant watching me send the bitcoins to his QR should be fine.  Then I will agree to come in and buy his and anyone else's bitcoins back every couple weeks or once per month, and the merchant can buy the bitcoins on his bitstamp account and send them to me.  Using this method, there is a very high chance the merchant will see that he would have made more money if he just left the funds in bitcoin, and he will perhaps not request that I convert them anymore.

Let's try to think of solutions better than this.

I am not impressed with Justus Ranvier's article.  Basically all it does it point out that in a country with capital controls, the only way for people to get another currency is to trade goods for it, which is extremely obvious, and not very relevant. It also makes the point that investment funds denominated in currency inflating at 25% can do better if they inflation-protect, which is also extremely obvious (as if investment funds are just leaving money sitting in pesos).  Most 3rd world countries do not have capital controls like Argentina does, although in my particular case in Costa Rica, the wire transfer fee of something like $40 acts as something like a capital control on very small transfers.  Let me know if there is a thread where that article is being discussed.

Kipochi charges only 2% vig, which is quite amazing, although the kenyan bitcoin forum reports that they are not operational yet.  Kipochi is essentially a bitcoin exchange in Kenya.  Obviously any country that has a bitcoin exchange in its currency zone does not have the problems I am encountering in this thread.

[Voodah]

This one's a killer and absolutely crucial for the mass adoption of BTC.

As an Argentinian I can easily see that BTC will not reach mass adoption until we have exchanges working with 3rd world banks.

[Seth Otterstad]

This one's a killer and absolutely crucial for the mass adoption of BTC.

As an Argentinian I can easily see that BTC will not reach mass adoption until we have exchanges working with 3rd world banks.

BTC appears to be blowing up in Argentina despite there being no bitcoin exchange there.

[Voodah]

This one's a killer and absolutely crucial for the mass adoption of BTC.

As an Argentinian I can easily see that BTC will not reach mass adoption until we have exchanges working with 3rd world banks.

BTC appears to be blowing up in Argentina despite there being no bitcoin exchange there.

Yup, bitcoin-qt downloads and some other recent stats indicate so. Tbh I haven't noticed it in the street or people I'm involved with yet.

But yeah, it makes sense here if you have ways to acquire the btc.