Why are merchants not serious about the advantages of Bitcoin?

[gabbello]

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'.

+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.

[Nagle]

Offer something like a 5% discount on BTC purchases, sharing the savings they enjoy using BTC.

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%.

[ebliever]

Offer something like a 5% discount on BTC purchases, sharing the savings they enjoy using BTC.

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.

[BitUsher]

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%.

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.

[exoton]

Offer something like a 5% discount on BTC purchases, sharing the savings they enjoy using BTC.

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%.

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

[leex1528]

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.

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.

[moriartybitcoin]

merchants are getting onboard, consumers are the problem.

[1Referee]

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.

[pawel7777]

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

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 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.

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.

[nextblast]

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

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

[Shattered]

......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

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...

[leex1528]

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.

[prestonjolly]

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.

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

[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.

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.

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.

[finlon]

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.

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.

[pawel7777]

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.

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/

[Jace]

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

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)

[thompete]

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

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:

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 .

[Jace]

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.

[687_2]

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.

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.