Cardholders will have a window of time to file a dispute. That window will remain open for about 60 days if they made a purchase on their credit card. That means a merchant won’t know if the money is truly theirs. Well, at least after two months after the transaction date. But Bitcoin can put the power back into the merchant’s hands. How will it do that? For one thing, it can create security for merchants and cardholders alike. And there are more benefits Bitcoin can bring in dispute management.
What is BitCoin?
Bitcoin was created in 2009 by an unknown person with the alias Satoshi Nakamoto. The difference between bitcoins and government-issued money is that it can not be inflated or counterfeited. It’s limited to twenty one million bitcoins. And that will never change.
Like any currency, Bitcoin can be obtained if you sell something with this cryptocurrency. One bitcoin (BTC) was valued at USD $8,792 on April 24, 2018. And it jumped up to $500 in value in no less than five minutes! Another method is to start accepting Bitcoins like any other payment method. For instance, you can adopt one of its Merchant Solutions and ask cardholders, ‘would you like to pay in cash, credit or bits?’
Bits Are Stored in Digital Wallets
But the easiest way to obtain bitcoins is through a bitcoin exchange. Bitcoins are stored in a “digital wallet” either in the cloud or on a computer. A bitcoin can be spent once it’s in the wallet. Afterwards, cardholders will send the merchant the exact amount that is requested. Then the merchant will get a confirmation that the payment was received. There’s no middle man or banks in this process. It’s just currency heading straight from cardholders to merchants.
Wait, What’s a ‘Bit’?
Bits are the coins within Bitcoin. You can compare its use by thinking of quarters, pennies and other cents that are equivalent to a dollar amount. One bitcoin is divided into 1,000,000 individual bits. So, that means one bit equals to 0.000001 BTC.
Let’s see how that translates to a US Dollar. We’ll use the $8,792 value as an example. At this rate, one bit was valued at USD $0.008792.
There are some businesses that accept bitcoin. Some examples include Overstock.com, DISH Network, and Expedia. And there are thousands of Shopify store owners who accept bitcoin. Shopify will share some success stories when their merchants accept bitcoin payments. More merchants are accepting bitcoins while I’m writing this blog post. That’s because its benefits can be earned across industries. It won’t be surprising to see cardholders spread this cryptocurrency worldwide.
A normal credit or debit card payment is a pull transaction. That means merchants get all the sensitive information from the cardholder to pull money from the account. The risk cardholders experience is that anyone can charge their card. A fraudster or a merchant can authorize a charge if they have the right information.
But Bitcoin goes through a push transaction. Think how cash is exchanged between cardholders and merchants. Cardholders decide how much money to give before the purchase. And merchants can not take more money than what is voluntarily given. The sale is final once cardholders give the bits or bitcoins to merchants.
A chargeback can occur if a purchase is made through a credit card. The merchant may not only lose revenue from the sale. She may also end up paying costly chargeback fees. All bitcoin transactions are protected by the bitcoin network. That means merchants can accept payments without worrying about the threat of fraud or chargebacks.
Little to No Fees
There are no fees for merchants to accept bitcoins. And there are no fees for storing bitcoins. Those are two great benefits! But merchants will pay a small fee through hiring companies in order to process bitcoins. Bitpay is a company that will accept bitcoin payments for your business. It will store your bits and convert them into a dollar currency for future spending. Bitpay will directly deposit bitcoin earnings into the merchant’s bank in their own currency for a flat 1 percent settlement charge.
This fee is much smaller than most credit card processing fees. Especially for small businesses that are paying much higher credit card fees. Ecommerce merchants that are more at risk for fraud and chargebacks will see the difference. Currently, small merchants will pay 2 to 4 percent per credit card transaction. That often involves additional “hidden fees” heaped on that quickly add up. Bitcoin erases all of that nonsense.
Easy International Payments
Bitcoin is the world’s first borderless payment network. Payments in any amount can be accepted anywhere in the world from any computer or mobile device. A bitcoin payment can be transferred from the other side of the world in just a few minutes. There are no limits, delays, or high fees within the process. This opens up international selling for small businesses that normally avoid it because of cross-border transaction fees. In a way, the world just got a whole lot bigger for small merchants.
Popularity With BitCoin Fans
People are passionate about bitcoins. There’s an emerging market of cardholders excited to find stores that accept bitcoins. Bitcoin.com has a search of stores that offer bitcoin payments for its users. This helps them to easily find stores that accept bitcoins. This market will gladly go out of their way to support bitcoin friendly businesses. Bitcoin can have cardholders interested in businesses that didn’t catch their attention beforehand.
Should Your Business Accept Bitcoins?
One positive to bitcoin is that its fees are lower from traditional credit card payments. There will be a small transaction fee. But there are no cross-border fees, and no fear of chargebacks! It opens up a new market of cardholders that will come to your business. Adding this payment option may make cardholders choose your store over the competition.
Bitcoin users are still a small population compared to people that would prefer to use traditional methods of payments. Less than 1% of the entire population use bitcoins, so accepting bitcoins will not make or break your business. But the market is growing. And the value in bitcoin reaches a new peak every time. You may want to think of adopting bitcoin terminals in the near future.