Live at Apex: Exploring the Right Bitcoin
Application for Retailers
By: Matt
Gertler
Welcome back to the
official All Payments Expo Blog. We just wrapped up the “Omnichannel Forum: Exploring the Right
Bitcoin Application for Retailers.” The forum addressed how technological
innovation will change the face of retail by considering the latest experiments
in point-of-sale (“POS”), loyalty, and gift card applications. I would like to
thank our panel, Brad Chun (TechCafé), Judd
Bagley (Overstock.com), and Sony Singh
(Bitpay), and our moderator, Steve Beauregard
(GoCoin) for joining us today.
POS transactions are
going to undergo a massive overhaul in the coming years. Beginning in October
2015, merchants that do not switch to the Europay-MasterCard-Visa (EMV) chip
standard will be liable for any resulting credit fraud. This is coinciding with
a switch from Windows XP based systems to cloud based POS solutions. A
significant benefit of storing the system on the cloud is that it is much
easier to change or add more functionality. For example, if the system is
stored in the cloud, merchants can begin accepting Bitcoin almost immediately. Such
a change previously would have required getting new hardware if not completely
replacing the old system.
But why would a
retailer want to accept bitcoin? Traditional payment processors charge 2-3%
whereas bitcoin merchant service providers provide this service for 1%. This
does not take into account credit fraud, which increases the 2-3% cost to
merchants. Bitcoin is also fully secure, so there is no concern for many credit
frauds, such as charge backs. Additionally, Bagley shared statistics from
Overstock, showing that the average Bitcoin transaction is three-times greater
than the average USD transaction. He suggested that Overstock’s most loyal
customers are those that pay in Bitcoin.
Once the EMV
standard is implemented, the new POS systems will be NFC-enabled. This will allow
retailers to accept mobile payments such as Apple Pay and Google Wallet. When
you consider beaconing and push notifications alongside these new payment
methods, retailers can interact with customers in new ways. Communication does
not end when customers leave the store, but may be triggered when they or near
it, or even at home when watching a retailer’s commercial. While the last idea
might only be an idea currently, it is not a stretch of the imagination that
future generation televisions will have the capability to share this
information.
Bill Ready (PayPal) explains
the importance of mobile in the retail space is that consumers are looking to
fill spare moments throughout the day with their mobile devices. He says that
“if a retailer can get an app on a consumer’s phone, [it has a] tremendous
opportunity to interact with that consumer,” regardless of the customer’s
location. This allows retailers to create contextualized experiences tailored
to individual customers. Presumably this will increase sales. Considering that
both Apple Pay and Google Wallet still rely on the credit card networks, and still
suffer with the same 2-3% processing fee, the question remains of how Bitcoin
can be implemented alongside a mobile strategy.
We are probably
still a few years away. Ideally, customers would be able to link a debit or
credit card to a Bitcoin wallet and behind the scenes have the payment
processor convert the USD into Bitcoin seamlessly. While we are not quite there
yet, Xapo has created a Bitcoin debit card that
may solve this problem. However, it is currently in beta testing and not
available in the U.S. or India. A solution that is available in the U.S. is
provided by one of our sponsors, Gyft. Gyft
purchases gift cards as a wholesaler and resells them to its customers. While
they can pay by credit card or Bitcoin, customers are encouraged to pay by
Bitcoin by being offered an extra 3% in reward points because there are no
transaction fees. A Forbes
article explains how this method was vital in the author only paying in
Bitcoin for a week.
Matt Gertler is the Head of Strategy at the Digital Currency Council
(“DCC”) and is pursuing his JD/MBA at USC. He is experienced in FinTech, having
worked for Venmo, Braintree Payment Solutions, and Earnest before joining the
DCC. If you have any questions, please tweet @magertler using, #APEXLV15, and
they may be included in a future post.
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