The New Stuff

Accepting virtual currency: the basics for brick-and-mortar retailers


Everyone talks about how important it is for retailers to display a “virtual currency accepted here” sign in their store window. Fair enough. But once you get customers into your store, you had better have the capabilities to complete the transaction – otherwise, it’s very possible those prospective clients will be leaving without having purchased a thing.

What follows are some of the basics of what every brick-and-mortar retailer needs to know when it comes to accepting virtual currency.

Stand-alone vs POS systems

Brick-and-mortar retailers can accept bitcoin and other virtual currencies in a couple of different ways: via stand-alone mobile payments, and through an integrated bitcoin-embedded POS system.

Stand-alone mobile payments are ideal for micro-merchants or small businesses. But larger merchants will want to integrate bitcoin with their POS system.

Similar to a person-to-person bitcoin payment, a stand-alone mobile payment involves the customer sending the correct number of bitcoins to the merchant’s bitcoin wallet using a bitcoin wallet app.

To receive a P2P payment, merchants need to use an app from a provider such as Coinbase which lets a merchant enter the price of an item or service into their smartphone or tablet. This presents a QR code containing the amount to be paid and the bitcoin address the money should be sent to. The customer scans this QR code with their smartphone and sends the payment to the merchant.

The disadvantage to this approach is that it requires purchase transactions to be entered twice: at the POS system and on the merchant’s mobile device. In an integrated POS system, however, the employee just hits the bitcoin payment button, and the POS software generates a QR code on the POS device’s screen for scanning by the customer. The employee doesn’t have to enter the amount, because the POS system knows the amount.

Various vendors with integrated POS technology offer bitcoin acceptance. Just two of these vendors are Mississauga, Ontario-based Visual Information Products in partnership with Toshiba; and Revel Systems, with headquarters in San Francisco.

BitPay partnered with Toshiba to add Bitcoin acceptance to the Toshiba VisualTouch POS system, which was developed by Visual Information Products.

Revel Systems uses Coinbase as the bitcoin processor for its iPad-based POS platform.

“We’re finding that 5 percent of our customers are asking for our bitcoin system, which is a good response rate for a new technology,” says Chris Ciabarra, CTO of Revel Systems. “Two-thirds (65 percent) of our customers using the bitcoin solution are restaurants, and the rest are retailers. We’re seeing a lot of adoption in New York.”

It’s essential that virtual currencies be accepted by brick-and-mortar retailers, if they’re to take off, says Ciabarra. “It won’t be enough for [virtual currencies] to just be adopted by e-retailers,” he says. “If consumers find they can’t pay with bitcoin everywhere they shop, they’ll get frustrated and may stop using bitcoin in stores.”

To convert or not to convert?

If a merchant holds money in a bitcoin account, they’ll be subject to the risk of fluctuations in the exchange rate between bitcoin and their local currency – which can, of course, be volatile.

“BitPay protects its merchants and their customers against price volatility by holding and locking in the Bitcoin exchange rate for 15 minutes,” says Stephanie Wargo, BitPay’s VP of Marketing. “Consumers have 15 minutes to complete the transaction before the exchange rate quoted on their screen becomes invalid and another bitcoin price appears.”

Merchants can split their bitcoin revenues between bitcoins and local currencies on BitPay’s platform. “They can cover their hard costs by converting enough bitcoins to local currency and keep the rest in bitcoins so they can experience bitcoin exchange rate appreciation,” says Wargo. “Half (50 percent) of our merchants convert their bitcoins instantly to their local currency, 5-10 percent hold 100 percent in bitcoin, and 40-45 percent do a split. We saw a lot more merchants holding bitcoins after the U.S. government announced firm guidelines on bitcoin taxation. The government said it considers bitcoin as property, which means people holding bitcoins are liable to capital-gains tax on any growth in value.”

TigerDirect doesn’t hold any of the bitcoins it receives from customers for purchases on its websites, says Steven Leeds, TigerDirect’s Director of Marketing. “We never touch bitcoins, so we don’t have a tax liability,” he says. “Our processor, BitPay, handles the conversion to U.S. dollars for us and settles with us the following day in dollars.”

As the subsidiary of a publicly quoted company, Systemax, TigerDirect isn’t in the business of currency speculation, Leeds notes. “We have a fiduciary duty to our shareholders, our customers and our employees.”

Adapted from “Virtual Currency 101 for Retailers,” by Robin Arnfield.

The in-depth report is available as a free download from Virtual Currency Today by clicking here

image_pdfimage_print

Recently Published

»

Utilizing Joint Ventures as a Section Methodology

Infiltrating an outside market can be very hard, regardless of the ...

»

Pick up Advantages from Joint Endeavors

Joint wander connotes superb business opportunity that clears ...

»

Beginning your own business on the web

When beginning your own particular business on the web, it might feel ...

»

Simple Approaches to a Superior Life

Need a superior life? Huge changes are troublesome, and require ...

»

Inspiration and Objective Setting

In the event that you realized that you could accomplish anything you ...

»

The Untold Agreements of a Cryptocurrency Community

If you’re reading this, you must have heard of ...

»

Keep Smiling

I get a kick out of the chance to imagine that I have taken in a ...

»

Giving Bliss

We as a whole need bliss. We as a whole need appreciation. We as a ...

»

Self-assuredness

Self-assuredness is a fundamental ability; valuable both inside and ...

%d bloggers like this: