Overstock’s acceptance of, and $1m of sales, in Bitcoin transactions comes as validation for the cryptocurrency as it tries to re-establish credibility after a series of unfortunate events. And with some commentators predicting that Amazon and eBay will one day accept Bitcoin, it is not hard to see why the peer-to-peer electronic currency is currently proving to be a contentious topic. While Bitcoin might be sold as an easy solution to the problem of adapting a website to accept several currencies at once, there are a few factors that still need to be considered before the digital currency has a real chance of going mainstream. Is it really relevant to the customer or even on their radar? When you already have a widely accepted and recognised currency, does the consumer really want another? I seriously question whether consumers really need a currency like Bitcoin.
Most online retailers expect to sell to their local market and want their consumers to pay in a currency they understand and trust. At Spreadshirt we are active in 17 countries, offer nine languages and eight different currencies each matching their local domain. This is because consumers like to be able to see exactly what something will cost. Consumers already have their national currency and payment methods such as credit, debit cards and PayPal (around 10% of payments to Spreadshirt use PayPal). So if you already have widely accepted and recognised currencies, there isn’t a pressing need for another. As a mass market internet retailer however, I have tried to find a few key reasons why the average consumer might want to use Bitcoin:
Better security – but most customers are not unhappy with transaction security via existing methods, they live with risk. And those that are worried tend to shop with trusted brands to reduce the risk rather than move payment methods. And what’s more recent news stories highlight that as the digital currency becomes more popular, it is also becoming an attractive target for cybercriminals.
Lower costs – again, not to the consumer. Very few retailers offer lower costs to non-credit card payers. Many are not allowed under their payment contracts. Other than tickets for events and travel it is rare to see extra charges for credit cards and most consumers have debit cards anyway. In addition, the value of Bitcoin against the dollar is highly erratic making it difficult for Bitcoins to make the leap to genuine currency, because retailers will be wary of accepting a currency whose value is so unpredictable.
Less complexity – so a consumer has to get yet another currency from their every day one and then try and work out the pricing, not exactly easier!
Transaction speed – the average consumer does not care. If you are transferring large enough amounts that take over 24 hours then yes this may be of interest. But this has only happened twice in my life when buying or selling a company, and simple methods exist to deal with it, so this is not an issue relevant to the mass market.
No regulating tax authority – but most consumers pay income tax from salary and buy goods from VAT tax-paying retailers. Perhaps some self-employed people might like the idea but then the companies who pay them still have to declare payments.
E-wallet solution – this idea I like but I have seen plenty of evidence that people are using PayPal as a wallet. And in the last decade there have been 1000s of attempts to get to critical mass on e-wallets. The people who win here will be mobile phone billers who can use the phone as a wallet and have the customer already. I bet on Vodafone or O2 over Bitcoin.
Global reach – I have travelled widely and I have never had a problem with Visa or MasterCard. Finding standard cheap banking options has never been a problem. Bitcoin therefore might be only useful if you are trying to do business in very strange places. Again this is not a mass market issue.
As things stand, I don’t see an urgent need for Bitcoin from consumers. Credit cards, direct payment or other methods work well and cost the consumer nothing. I do not see why the average consumer will want to use a new digital currency. And if the consumer does not see a compelling reason to adopt it then established retailers will not adopt it either.
I receive hundreds of requests a month from consumers and our ecommerce platform sellers wanting Amazon checkout and payment. We have yet to have one for Bitcoin. If Bitcoin is not mass market then it will be of little use to ecommerce retailers and platforms. The internet is a funny place however, where new ideas do catch on. My job therefore is to try and cover as many of our customers’ needs as possible, so if enough people want to use either Bitcoin we will adapt and find ways of taking payments!
Philip Rooke (PhilipRooke) is chief executive of Spreadshirt.