In a way, bitcoin has been used by retailers as a marketing strategy to bring some much-needed buzz to brands that may be struggling.
“Every retailer knows that if they make some sort of announcement on bitcoin these days, they know it’s going be picked up more broadly by the media, than if they decided to accept Discover cards,” said Glenbrook’s Peabody.
One disadvantage from a consumer’s point of view is that, in general, Bitcoin sales are final and irreversible. Still, there are some vendors that do return bitcoin payments for faulty products, said Adam White, director of business development and strategy at Coinbase, an online wallet company in San Francisco.
SAVING ON TRANSACTION COSTS
For retailers, the biggest benefit in accepting bitcoins is lower transaction costs. Coinbase and Bitpay, for instance, charge less than 1 percent per transaction. A credit card payment, in contrast, typically carries a 3 percent fee.
Dell, which started accepting bitcoins in July, Dish, and Expedia all say their bitcoin revenue so far have exceeded their expectations. The three companies declined to give specific figures, but said bitcoin sales are modest relative to their overall revenues.
“From the first day…we saw traffic at the site, it has been growing since,” said Paul Walsh, chief information officer at Dell Commerce Services in Texas. He cited a recent single purchase in bitcoins of a server worth more than $50,000.
At online travel agent Cheapair.com in Calabasas, California, bitcoin sales totaled $1.5 million so far since it started accepting them in November 2013, said CEO Jeff Klee. In July alone, bitcoin sales at the company jumped 20 percent.
Data from BlockChain.info, a bitcoin wallet which stores the digital currency for customers, showed that over the last three months, there were between 50,000 and 75,000 bitcoin transactions a day on average, worth between $45 million and $85 million. That compares with U.S. retail sales of about $15 billion a day during July, according to U.S. Census Bureau estimates.
As of the end of June, bitcoin wallets, representing the number of users who have bitcoin accounts, have grown to 5.32 million, from 765,039 users a year ago, CoinDesk data show. It predicted that wallets would increase to 8 million by year-end.
“I don’t see too much risk for us right now on bitcoin,” said Dish’s Han. “We are not expecting bitcoin to revolutionize the way our customers handle their accounts, but based on what we have seen so far, there is no reason for us to change.”
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