Why are merchants not serious about the advantages of Bitcoin?

[ebliever]

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.

[Q7]

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...

[kokojie]

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.

[leex1528]

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?

[Elwar]

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

Maybe that was another site.

[NeuroticFish]

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.

[ebliever]

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

Maybe that was another site.

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.

[ebliever]

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?

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

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.

[ebliever]

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.

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.

[zetaray]

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.

[BTCIndia]

Chicken & Egg problem.

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

[commandrix]

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

[AJinNYC]

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. 

[Febo]

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.

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.

[msc]

If I were a merchant, there is no incentive for me to accept bitcoin. Payment gateways charges the same fee as credit card companies

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.

[ebliever]

If I were a merchant, there is no incentive for me to accept bitcoin. Payment gateways charges the same fee as credit card companies

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.

[leex1528]

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

[BitUsher]

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

[pawel7777]

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.

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.

[franky1]

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