The pieces of the bitcoin infrastructure are coming together quickly. Two weeks ago, it was hard to imagine how someone could pay a brick & mortar store on site with Bitcoins. The solution seems to now be here. Let's use Sarah's Hair Salon as an example...
Step 1) Winston has the new Android app (
https://market.android.com/details?id=com.bitcoinandroid) that was all over the news today
Step 2) Sarah sets up account with Bit-Pay.com, and selects the "deposit as USD" option, so that btc payments instantly convert to USD in her account (she's unsure of btc and would prefer dollars for the time being).
Step 3) Sarah puts out a "We Accept Bitcoin" sign with a QR code of her bit-pay.com wallet address
Step 4) After the haircut, Winston scans the QR code at the cash register, and sends payment in btc to Sarah's Hair Salon.
Result: Sarah has received the money as US dollars, and Winston paid with Bitcoins from his pocket. No credit card fee, no chargebacks, no fraud. This is pretty damn simple. Vendors have incentive to accept Bitcoin because it will enable them to steal customers from competitors who don't. Nobody needs to "switch" to Bitcoin either... it grows organically alongside normal payments with credit cards and cash.
I think Bit-Pay.com is still in beta (and the android app is still "experimental") but you can see the functionality is ready. Proof of concept completed.