In April of this year, Bitcoin celebrated an important usage and adoption milestone, recording its 400 millionth transaction. This is a watershed moment for the cryptocurrency since in its inception in 2009. In addition to an incredible price surge, confidence in the longevity of Bitcoin will likewise increase, thus giving it more mainstream appeal. In this article, 8 experts provide valuable insight into how to accelerate Bitcoin adoption amongst small retail businesses.
Payment Processors, Employee Accessibility, Local Bitcoin Communities
Price volatility is a big issue for small businesses wanting to accept Bitcoin. Even if a business owner is personally comfortable with the dramatic changes in day to day price, it’s often an accounting nightmare for them. This can be largely mitigated by using a payment processor like BitPay, who handle conversion into USD for the merchant, but such services are not available in many countries or even to certain industries in the United States.
Employee training: On many occasions I’ve gone to visit a merchant who is reported online as accepting Bitcoin, only to encounter employees who are unaware of the fact that the business accepts (or once accepted Bitcoin). Sometimes it’s the case that only the business owner knows how to process payments. Other times the employees know about it but have to fish a dusty and unused tablet out of a drawer and then figure out how to use it.
Lack of consistent sales in Bitcoin: Linked with #2 above, when a business doesn’t get Bitcoin customers on the regular, their acceptance tends to wane.
Bad user experience with Bitcoin: Whether it’s simple wallet UX issues or issues inherent to BTC itself, many merchants and consumers have found accepting or spending Bitcoin to be more of a hassle than its worth.
Price volatility can be mitigated by using a payment processor like BitPay, or by creative hedging strategies, although these might not be feasible strategies for some merchants. I’m advocating for the creation of POS software that instantly converts Bitcoin received into a USD stablecoin, such as USDH. This would bring the price stability advantage of a merchant processing service while also retaining the permissionless nature of cryptocurrency, but would still have the disadvantage of providing a more convoluted reconciliation process for the merchant.
Rather than relying on dedicated hardware and software, I’ve found that the merchants whose employees are most able to receive Bitcoin payments tend to have Bitcoin integrated into their existing point of sale terminals. When Bitcoin is just another option on the screen alongside credit card and cash, it’s easy enough for employees to figure out.
A good way for merchants to increase the volume of their Bitcoin sales is to tap into their local Bitcoin communities. By way of hosting their own events or by connecting with a local meetup organizer, getting in touch with the local cryptocurrency community is a proven method of driving steady Bitcoin sales to merchants.
The unreliable user experience of legacy Bitcoin (BTC), which over the past several years has become more of a store of value than a currency, can be in large part mitigated by switching to Bitcoin Cash (BCH), which is optimized for use in payments and casual commerce. Bitcoin wallet software has become much more user-friendly over the years, although I believe there’s still a lot of progress to be made on this front as well. “
Jake Smith, Founder, CoinSpice
Bitcoin Must Be Cheaper To Accept Than Traditional Payment
“Adoption will occur when it is better, faster, and/or cheaper to accept a digital payment—in this case, aka, cryptocurrency—than it is to accept a traditional payment. In addition to Facebook’s Libra, there are a number of digital payment systems in development that have the potential to reduce the crushing burden of merchant card fees. Most businesses pay the credit card companies in excess of 3 percent of gross revenue, considering fees, chargebacks, etc. for the “privilege” of accepting their cards. For companies that receive most of their revenue via credit card payments, the reduction of that fee will dramatically change their operating results. Facebook’s Libra has shined a light on this issue, and will drive many early adopters to the space within the next six to 12 months.”
Mike Minihan, Partner, BX3 Capital
“Merchant education is key when it comes to adoption. With credit card fraud and interchange fees increasing each year, many retailers are already looking elsewhere, but it will take time before they understand and trust blockchain enough to use it for their business. Although large corporations were slow to embrace crypto, we’ve recently seen many come to terms with the fact that crypto is here to stay, and as they all jump aboard, this exposure leads to more interest, education, and adoption.
Blockchain, Bitcoin, and cryptocurrency have been buzzwords for years, but the general public (i.e. consumers) are still pretty uneducated on how it all works. With major players like Facebook joining the crypto world backed by other big names including Visa, Mastercard, Uber, and Paypal, as well as more large retailers accepting crypto payments, consumers will become more educated on how it all works, and they will trust the technology more. This is what will lead to mass adoption.”
Eric Brown, Founder and CEO, Aliant Payments Inc.
Guarantee Of Price And Availing Them The Free Transaction Service
“Bitcoin is well known as the mother of cryptocurrencies and its future adoption or replacement to the fiat currency will totally depend on the wide popularity amongst the small retailers – Which needs a couple of changes with the existing blockchain network.
Scalability – Currently Bitcoin blockchain network is able to process only 7 transactions max per second which is not easy to scale in case if future mass adoption started. The solution to this problem is to have side blockchain where once user connection established both should move to side-chain where they can send millions of transaction hassle-free, which also free the main blockchain to perform other transactions.
Setting Up POS and ATM – Small retailers only care about the use of bitcoin, they will only accept Bitcoin, if there are resources outside to consume or avail bitcoin same as fiat currencies. Setting up some ATMs and introducing POS machines and credit/Debit cards can really pump up their believe in Bitcoin.
Volatility in Price – Major concern which every small retailer having is the price volatility of Bitcoin as we have seen 20%-30% price drop in a minute, in this way to assure them we have to introduce a middle layer network which takes Bitcoin immediately and lock its current price in exchange of fiat, which assure them no loss of the money.
Change in transaction fees – From the current mining mechanism, it doesn’t fit for micropayments due to the higher transaction fees which can be overcome by introducing a network which works on owning mechanism like EOS. where you can stack Bitcoin and a relative specific amount of RAM and Bandwidth will be allocated to you of the network, which can be used for multiple transactions without paying a single penny.
Above all are the couple of twists, which can really accelerate the adoption amongst small retailers. Bottom Line – Giving them a guarantee of price and availing them the free transaction service can only accelerate the adoption of Bitcoin among small retailers.”
Kirtish Vyas, Founder and Director, Mrvyas Idea
Employ Software Solutions
“The major barrier to entry on the business front, in my opinion, is the lack of regulatory understanding of cryptocurrency, which in turn makes for poor advisement being issued to investors. As Bitcoin and similar offerings are currently classed as property for the purposes of taxation, capital gains tax must be paid on any appreciation of the currency at the time of its disposal. For one or two annual trades, it may not be overly complex to calculate. However, businesses that accept payments need to log the dollar price at the time of the acquisition, and subsequently at the time of disposal. From this, they need to figure out the cost basis and the best methodology for calculating what’s owed.
The best way to keep track of this is to employ software solutions that do the heavy lifting, greatly minimizing the risk of miscalculating or incorrectly reporting. This ensures that the onboarding procedure for businesses is vastly easier and more cost-effective for businesses that would otherwise need to devote manpower to navigating complex tax liabilities.”
Sean Ryan, Co-Founder and CTO, Node40
Consumer Numbers Need To Be There
“While Bitcoin, and the wider cryptocurrency ecosystem, presents multiple advantages for small retail businesses, adoption amongst these businesses requires a few factors:
The user experience has got to be seamless. We have been biased by the ease-of-use of Apple Pay and requiring Americans to now adopt a system of QR codes and long wallet addresses is just not going to happen. Crypto needs to be a contactless payment for in-store purchases. Otherwise, it’ll be exclusively online and while this represents a significant amount of commerce, the majority of retail payments are still made in-store so it absolutely should not be neglected.
Customer fees should be small-to-nothing. When I got out and by food, I don’t expect to have to spend more than the value of the items I purchase (sales tax excluded), so asking people to spend money so they can spend money is not really going to make a whole lot of sense to people not familiar, or unwilling to accept, the reality of crypto miners.
Payments need to be omnichannel. For a merchant operating at both a store and online level, they need to align all payments and sales channels. Having bulky UI which doesn’t cater to this and it’s really going to reduce the adoption when systems like Stripe exist for fiat which solves these issues seamlessly.
Mobile e-commerce UI has got to be optimized. If I want to make a purchase on my cell phone using crypto, at the moment the process is beyond terrible. Using deep linking, the payments process has got to be as seamless as PayPal, if not better. Otherwise, merchants simply won’t see the value in it because the customer experience will be too severely impacted.
Consumer numbers need to be there. No merchant is going to invest time, money, and resources into adopting this system unless there’s demand from the consumer. While this may be somewhat ‘hidden’, every victory and boost in sales as a result of adopting crypto payments needs to be communicated beyond the crypto community and into the public sphere.”
George Payne, CEO, GatePay
The Three-Fold Solution
“Merchants should educate themselves: In order to gain more publicity, many retailers started accepting bitcoin as a marketing ploy for their business. Originally, small businesses accepting cryptocurrency was a way to gain positive attention and gain new customers.
Lower transaction fees: Typically credit card transactions charge between 2 and 4% on any given transaction. Bitpay claims to only charge 1%, while Coinbase claims there is no fee when accepting cryptocurrency.
Access to new markets: International market places are accepting cryptocurrency more frequently and this will allow for merchants to diversify their clientele. There is a ‘bitcoin community’ and as the publicity begins to gain more traction, the communities’ knowledge on bitcoin will also take off.”
Content Creators Are The Small Business Niche
“Product Market Fit is a phrase used in the tech startup space to describe the target niche a company needs to operate within, thus their product must fit a particular market. All small businesses won’t be the target market for Bitcoin but the ones that will be incentivized most to early adopt.
Content creators are that small business niche and they use subscription and donation platforms. Many also suffer from customer censorship and arbitrary terms of service on those platforms. If developers can build platforms utilizing Bitcoin or if marketers can get existing platforms to integrate Bitcoin, then those will be better suited to garner the most amount users barred from mainstream services.”
Peter Ryan, CEO and Founder, Ryan Research
Over the past couple of years, not only has Bitcoin’s price increased but so has its appeal. As the cryptocurrency becomes more popular with consumers, so in turn, it will be necessary for small businesses to adopt it as a payment option. There is still much to be done for Bitcoin to compete with other payment platforms such as credit cards. Yet, the expert commentary in this article provides invaluable insight into how to accelerate Bitcoin adoption amongst small retail businesses.