While it’s safe to say that 2014 was a banner year for bitcoin in terms of merchant adoption – with the likes of Overstock, DISH, Dell and Microsoft entering the space – 2015 hasn’t quite started with the same bang.
Though rumors continue to swirl about a possible Uber or Airbnb entrance, the highest profile merchant to accept bitcoin this year has been a local subsidiary of global real estate franchise RE/MAX.
Members of the bitcoin processing ecosystem seem divided on the state of this industry sector entering March.
Those contacted by CoinDesk all agreed that, after months of grabbing the lion’s share of headlines, big merchant announcements have been “tapering off” for bitcoin. But, while some voiced their belief that the current lapse in mainstream media attention will pass, others suggested it points to new challenges for merchant acquisition.
Akif Khan, vice president of solutions strategy at Bitnet, suggested this development says little about the underlying appeal of bitcoin as a payment tool:
“Over the last year, there haven’t been that many large merchants announcing that they’re accepting bitcoin – Overstock, Dell, Microsoft, Expedia, Time Inc and a few others. That’s really only one every couple of months. That will ebb and flow, so I don’t think we should read too much into having a quiet patch for a month or so.”
Michael Dunworth, CEO of bitcoin processor SnapCard, echoed this optimism, indicating his belief that “we’ll see more [merchants] than ever before start accepting [bitcoin] this year”.
The statement is supported by findings in CoinDesk’s most recent State of Bitcoin Report that showcase how, while slowing, the number of merchants in the ecosystem is expected to grow from 80,000 to 140,000 by the end of 2015.
Still, Steve Beauregard, CEO of cryptocurrency payments gateway GoCoin, had a different take, suggesting that many merchants haven’t yet had a positive enough experience with bitcoin for a substantial uptick in adoption to take place.
“I believe merchants have been widely disappointed by the number of transactions they see in bitcoin,” Beauregard said.
He went on to state that “consumer adoption is the problem”, speaking out against the ‘if you build it they will come’ mentality of the bitcoin ecosystem in past years.
Both BitPay and Coinbase, two of the most visible market leaders in terms of bitcoin processing, declined to comment on the state of their merchant operations.
The WordPress effect
One of the most public stories involving bitcoin merchants this year may have been the decision by web publishing giant WordPress to remove bitcoin from its checkout page.
Among the first major merchants to accept bitcoin, and an early advocate for the payment tool based on its political implications, the publishing platform has since expressed its continued desire to support the ecosystem. However, its decision was seen by many as a symbolic blow given the role it played in increasing bitcoin awareness.
Dunworth indicated that the event shows bitcoin won’t always serve the needs of merchants and that the payment method might not be a one-size-fits-all solution. “I don’t think WordPress saw enough value having it on their platform,” he said.
Khan, however, said that the experience of one merchant is not indicative of the state of the sector.
“Citing WordPress shutting down support is also a little alarmist given the subsequent announcement from them that they still intend to support it,” Khan explained.
Value proposition remains
Although the sector has fallen into what some might call a quiet period, most respondents indicated that the underlying value proposition for merchants – that the reduced processing fees can yield cost savings – remains intact.
Bitnet indicated that enterprise merchants remain interested in bitcoin as a means to drive revenue, while GoCoin said the potential savings and “cool factor” of bitcoin are still advantages that resonate with merchants.
Industry observers have a somewhat different view. Coinbase’s business development manager Nick Tomaino, responding to a query on the social network ZapChain, voiced his personal belief that the slowdown is the result of merchants losing the coveted “first-mover advantage”.
“A year ago, it made a big splash to be the first large company to accept bitcoin in any segment – you’d be the first in your segment and gain thousands of loyal new customers,” he said. “I think we’ll continue to see that happen in new segments, but there’s simply fewer of those segments today than there was a year ago.”
Jad Mubaslat, CEO of bitcoin exchange BitQuick, put it more simply, alluding to the somewhat disappointing numbers industry merchants see after the first few months of adoption.
“[There’s] not enough added business to justify it yet,” he said.
‘Passive’ approach
One commonly cited issue was that, while some merchants have enabled bitcoin, they may not be putting in the effort to help it succeed at the level needed to produce cost savings.
“We’ll see bigger names than last year, but it won’t just be accepting it for some areas of their checkout, it will be unique and interesting adaptations which will help increase the awareness and accessibility worldwide,” Dunworth said.
Beauregard, too, spoke to issues with how merchants have attempted to leverage bitcoin.
“Most merchants have taken a passive approach to integrating bitcoin as a payment method, instead of strategically testing and optimizing checkout flows to encourage consumer adoption,” he said.
Those who have seen success, he argued, have taken steps to invest time and resources into testing their checkout and educating customers.
“Merchants should have a strategic plan for digital currency and actually execute on it – not simply sign-up, integrate and expect traffic.”
Dunworth expressed hope that more merchants would follow the path of early market leader Overstock, which has since continued to experiment and engage with the ecosystem, or IBM, which, while not a merchant, has expressed interest in the technology.
He concluded:
“These big businesses are seeing advantages that extend outside of just accepting it, but really leveraging the power of the blockchain to innovate their business and make it more efficient.”
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