Article updated on 28th August at 11:59 BST
Coinbase, the bitcoin merchant service, has announced it will scrap processing fees for merchants until they make $1m worth of sales. Coinbase claims it is doing this to aid the adoption of bitcoin as a payment method by merchants.
“We wanted to lower all barriers for new merchants to get started, and help highlight some of the economic benefits of accepting bitcoin.” Coinbase said in its latest blog post.
The removal of the transaction fee will clearly appeal to small-scale businesses who don’t imagine they will reach $1m in sales for some time. Furthermore, for the larger businesses that will pass that threshold, 1% is still a modest fee compared to those charged by other companies, for example, Visa or MasterCard.
Fred Ehrsam, co-founder of Coinbase, said: “We want to lower all barriers for merchants to start accepting bitcoin. Before, the savings from processing bitcoin payments rather than credit cards were very compelling (1% vs 3%+). Now, they’re impossible to ignore.”
We asked whether there was a time limit on this offer, Ehrsam said this was undecided, but that it would definitely run for the “foreseeable future”. When asked how much the waiving of fees would cost Coinbase, Ehrsam was upbeat: “It won’t really ‘cost’ the company anything, as we constantly have a nice two-way flow of individuals buying bitcoin on Coinbase, which offsets this natural selling flow well.”
Zach Harvey, co-founder of the Lamassu bitcoin ATM, said: “I think 0% processing fees for merchants is tremendous, and I expect to see more and more everyday retailers considering bitcoin just because it’s a smart business choice. Bitcoin is going in the direction of no longer being a market for idealists, but becoming a payment method with clear advantages of price and security over credit cards.”
Encouraging merchants to adopt bitcoin is clearly necessary. Anyone who has carried bitcoin knows that there are very few places it can actually be spent – although the number is growing slowly but surely. Beccy and Austin Craig, who are currently making the Life on Bitcoin documentary, have been struggling to find merchants in the US who are willing to accept digital currency.
“Evangelizing bitcoin turns out to feel a lot like a sales job. And I’m remembering how bad I am at direct sales,” Austin said in a blog post on day 16 of the challenge.
The couple is now making some headway, though, with a gas station attendee recently agreeing to sell them gas for bitcoins. A journalist from Forbes, however, had far less success in getting by on bitcoin alone when she tried doing just this for a week.
Coinbase has made a number of developments of late, recently enabling transactions via SMS, which allows users to send and request bitcoins using simple commands in text messages. Earlier this month, the company also implemented zero-fee micro transactions off the block chain.