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Retailing with Bitcoin

Posted 26 July 2017 Retailing with Bitcoin
Written by Jon Gulson
“Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments.  While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.” Satoshi Nakamoto (Bitcoin: A Peer-to-Peer Electronic Cash System).

This is the opening sentence to Satoshi’s white paper, which is coming to have greater meaning for merchants accepting bitcoin as payment alongside traditional card and cash payment facilities.

Bitcoin means no charge backs for merchants (through irreversible payments) and also lower transaction fees. These are integral and little understood benefits about bitcoin.

This is because within the traditional financial system, fraud is unfortunately accepted as unavoidable. This means the bank’s costs of mediating fraud is passed to the retailer in the form of higher transaction costs (by the bank), making completely non-irreversible transactions impossible (when accepting traditional card payments).

This is why Satoshi designed bitcoin the way it is: a peer-to-peer cash network which disintermediates the payment process. This means first person fraud isn’t an issue for merchants accepting bitcoin as payment is instant, irreversible and made before goods are exchanged. This overcomes an expensive problem for merchants handling high-ticket value items.

Other Benefits to Retailing in the Digital Gold Environment

Tech-savvy millennials enjoy the digital way of life and often retailers who accept bitcoin, do this as a way of signalling to the new demographic they are happy to accommodate the way they spend.

This also gives the merchant a choice of converting to fiat money at the point of sale (which can be done through bitcoin payment processors like bitpay), or holding on to bitcoin in the anticipation of long-term appreciation.
As time passes by, bitcoin therefore has the unique benefit of potentially increasing the merchant’s margin on the transaction for an indefinite period after it has occurred (for as long as they hold onto the bitcoin).

So bitcoin is ideal for increasing the three bottom lines of any business; namely cash, sales and margins. It also means easier accounting, without worrying about physical coins and notes.

Bitcoin also means the retailer and merchant isn’t having to store credit or debit cards on their point of sale systems, which overcomes the dangers of data breaches.

This also means the merchant is accessing worldwide markets instantly. It can lead to new relationships, collaborations, and ideas. Which will all become part of a new retailing environment as the price of bitcoin increases and people look for more innovative ways to spend their new found wealth.
Written by Jon Gulson
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