One of the most important features of any eCommerce site is the ability to accept payments from customers. Without it, you can’t trade, so it is crucial that this is set up and integrated into your site before it is launched. In this post, we’ll look at the payment options available to you and what …
Though the first currency transaction using Bitcoin technology took place in 2009, it has only been the subject of mainstream media headlines during the last two years. As the currency became accepted by more retailers and associated with more news events, Bitcoin came to be a word recognized by the general public and a more familiar way of conducting business transactions.
It would seem that Bitcoin is on the way to becoming a widely accepted new technology. However, it faces some major difficulties to becoming a common currency. It is a digital currency that is not well understood by the general population and is trying to survive in the midst of serious competition in the mobile payments field.
Reports of the first well-known websites to accept “bitcoins” as a new currency for payments began in late 2012, with Dell joining as the largest major retailer to accept bitcoins in July 2014. Along the way, news stories related to Bitcoin acceptance appeared more frequently, bringing the name into broader public recognition. If a small coffee shop or bookstore began to accept bitcoin mobile payments, it had a chance of being covered in the national news as part of a larger story about Bitcoin.
The use of Bitcoin technology has been addressed differently across the globe. The United States government is most accepting of it as a currency. The U.S. Treasury and the European Central Bank classify it as a digital currency, but not legal tender. Other governments officially recognize it as a commodity or an investment. The People’s Bank of China prohibits financial institutions from using bitcoins, and it is illegal to buy real-world goods with virtual currency in China.
Each development in Bitcoin banking policy and mobile payment acceptance had an effect on the value of a bitcoin. For instance, in October 2013 the FBI shut down Silk Road, a website that allowed anonymous illegal drug trading. News stories covering the event closely associated the criminal activity with Bitcoin. Silk Road primarily conducted transactions in bitcoins, since transactions using the currency are anonymous. The value of a bitcoin dropped in the days following the FBI shutdown.
Fluctuation in Public Opinion
Acceptance as a currency has expanded, but the anonymous nature of the bitcoin transactions creates some problems for public opinion and ease of use. Association with anonymous illegal activities such as those conducted by Silk Road is prominent in Bitcoin news coverage. Volatility in the value of one bitcoin can be demonstrated through the fluctuations in price after each major news story. Trading numbers for the company continue to be mostly steady, even as several economists have warned against the currency as an investment. However, trading will have to expand to a larger public group for Bitcoin to survive.
Public Understanding of the Currency
Another hurdle Bitcoin faces in the court of public opinion is clarity. Understanding what bitcoin currency is and the technology that allows the currency to be used is not a simple endeavor. It requires research, investment, and the establishment and use of a virtual wallet to complete transactions. Bitcoin mining, using computing power to earn bitcoins rather than purchasing them, also demands a time investment and learning curve. If the concept of purchasing and spending virtual money is tricky for a consumer to grasp, using personal computing power to solve math equations in order to earn the virtual money is not going to be readily adopted.
This issue creates a kind of stand-off that must be overcome in order for Bitcoin to survive. On one side, web hosts, websites, and online retailers have to put forth effort to expand acceptance of bitcoins. On the other side, consumers need to put forth effort to understand their use. Neither side can fully embrace the transactions until the other does.
The volatility issues are not the only risks for digital currency. It is open to security risks as much as any other online or mobile transaction, but does not carry several of the safeguards. A hacker was able to redirect traffic headed for networks belonging to large hosting companies several times this year. The hacker directed $ 83,000 worth of earnings from bitcoin mining away from the miner’s connections. The small bursts of activity were not immediately traceable in the mining operations.
Since bitcoin use is unlinked to an account with any identifiers, hackers accessing the currency can spend it without connecting it to their personal information. Traditional wallet theft can be handled by canceling credit and bank cards. However, a bitcoin wallet has no official owner, so there is no way to stop use of any further transactions so customers as well as businesses accepting this form of payment assume a greater risk than with an easily tracked credit card transaction.
Competition in the Mobile Payments Field
Whether or not web hosts expand their services to accept digital currency and ensure services are less vulnerable to hacking, Bitcoin could survive if it became a serious competitor in mobile payment options. This will be an uphill battle as there are already many mobile payment vendors working with retailers to accept credit cards on tablets and smartphones.
- Flint Mobile scans credit cards using the smartphone’s camera
- Square is a popular choice among small businesses that don’t mind paying higher transaction fees in exchange for no monthly fees
- Paypal has expanded into PayPal Here to allow customers to make purchases with their PayPal account balances
- Google Wallet allows both in-store and online purchases
These options all use traditional currency, which is easier to understand for the average consumer and easier to track for business and tax purposes for retailers.
Google Wallet is currently Bitcoin technology’s toughest competitor in the mobile payment field. Google’s virtual wallet has several advantages besides the use of traditional currency. Google is already a household name and well established as a top technology organization. Google also has the advantage of coming into public awareness without criminal activity associations, a weakness for Bitcoin. Google Wallet integrates the “wallet” balance and credit cards, so consumers can use the technology to pay with account money or personal credit cards using one mobile app, though it does not provide the anonymity that bitcoin transactions allow.
Bitcoin technology has a long way to go before it catches up to the ease of traditional currency and more recognizable names such as Google. It will need to make digital currency easier to understand for the general public if the goal is to compete in online and in-store retail transactions. It certainly has the potential to survive as a form of payment, but it may never be a mobile payment leader or even widely used if it cannot solve its issues with volatility, lack of clarity, hosting vulnerabilities, and risk to the consumer and retailer.
Top image ©GL Stock Images
Digital payments are quickly becoming widely accepted. A recent report by Juniper Research suggests digital payments will increase by $ 2.2 trillion over the next five years. The results of the study are especially pertinent for e-commerce sites as the largest percentage of increased digital spending will occur through the virtual purchase of consumer goods. More advanced methods of virtual payment such as Bitcoin promise increased security and reliability. However, e-commerce sites might not see widespread acceptance of crypto currency in the next year or two.
Challenges Associated With the Acceptance of Bitcoin
Bitcoin resembles cash transactions in numerous ways. Unlike credit card purchases, the transactions are anonymous and irreversible. Consequently, it is conceivable that Bitcoin could be used for everyday in-person purchases as well as virtual purchases. Vendors do not have to worry about challenges associated with accepting credit cards including lag time between transactions and acquisition of funds, disputed transactions, and traditional swipe fees.
Successful merchants typically follow one rule. It is important to make it as easy as humanly possible to allow customers to complete transactions, regardless of payment method. Currently, numerous shoppers are not familiar with Bitcoin, and unfamiliarity poses a challenge. The nation of Australia only started to recognize Bitcoin transactions as taxable, and other governing agencies struggle with the concept of accepting crypto currency as “real” currency. Until there is widespread acceptance of crypto currency, it is unlikely that successful merchants and vendors will be able to eliminate cash transactions. However, the transition from printed money to digital payments is viable given time and continual education.
Will Bitcoin Become a Widely Accepted Payment Method?
Widespread acceptance of new payment methods historically has taken decades. For example, Visa was launched under its current name in 1977, and MasterCard was launched under its current name in 1966. Both credit card giants took a several decades to become mainstream payment methods in the United States. E-commerce sites are highly competitive, and the success of individual sites is heavily reliant on positive user experience.
Currently, e-commerce sites and mobile app purchases introduced consumers to one-click purchasing on a broad level. Similarly, e-commerce sites such as Groupon sell experiences in real life rather than merchandise, and transactions are instantaneous. The dynamic nature of mainstream e-commerce makes the concept of an online crypto currency economy likely in the foreseeable future.
Concerns About Standalone E-Commerce Sites and Consumer Trust
Consumers want protection against various types of fraud on e-commerce sites. One proposed solution is to create a standard portal which supports all e-commerce activity. Regulation of all e-commerce activity would be an enormous undertaking, which additionally might not be particularly sustainable. Currently, credit card companies, banks, and merchants suffer substantial fiscal loss due to credit card fraud online. Additionally, numerous consumers risk identity theft. Experts attribute the rate of fraud and theft to numerous variables, including undereducated webmasters and merchants. However, theft and fraud is often unavoidable no matter what payment method is used.
Common Risks and Rewards Associated With Credit Card Transactions
Consumers are aware of risks associated with credit card use, but customers are also aware of benefits. Unlike stolen cash or bitcoins, stolen funds from a credit card can be refunded by the financial institution backing it. In the Catch-22 scenario, financial institutions and merchants have to suffer fiscal losses in lieu of customers.
E-commerce transactions that use bitcoin are irreversible, and they are similar to cash transactions. If cash is given away and an item is not received, buyers have to work directly with vendors or e-commerce platforms to resolve the issue. However, consumers currently find working directly with e-commerce giants than credit card companies is a more efficient way to solve issues associated with virtual transactions. Plus, buyers have additional identity protection when using crypto currency as a primary payment method.
Customer Service Can Make Bitcoin Mainstream
Surprisingly, major e-commerce sites with a strong focus on customer service such as Amazon do not focus marketing efforts on customer service options for buyers. Similarly, eBay has increased its focus on being a buyer-friendly platform over the past several years, but numerous buyers are unaware of the change. The responsive nature of major e-commerce platforms can make bitcoin transactions viable for buyers and merchants. After all, few buyers or merchants want to complete transactions on a platform that is not viewed as trustworthy or responsive. Merchant and buyer trust is integral to adopting new payment methods, and successful e-commerce sites typically function like successful big box stores in order to build and maintain positive reputations.
The Possibility of In-Person Transactions Without Cash
Small cash transactions pose a substantial issue for brick and mortar storefronts. For example, the Federal Bureau of Investigation reported over 5,000 bank robberies took place in year 2011, and over $ 38,000,000 in cash was stolen. In the age of mobile technology, it makes sense to emulate cash transactions and eventually replace printed money for individuals that can suffer small personal losses that are nearly impossible to recoup as well as larger businesses.
Increasingly, merchants use apps to swipe credit cards for small purchases in order to better serve customers. Additionally, merchants have recognized the value of virtual transactions via smartphone as funds are not lost. The use of crypto currency can better streamline routine purchases by immediately transferring funds rather than forcing merchants to wait for bank transactions to complete on banking days. Replacing printed money with digital payments is not as farfetched as it might sound. After all, a lost smartphone with funds attached could be similar to a lost wallet. However, smartphones have additional security measures. Wallets do not.
What Experts See in the Near Future for Merchants and Consumers
Bitcoin has gained recognition as taxable currency by first-world nations, and numerous experts speculate that crypto currency will make printed money obsolete in the near future. The transition away from printed money will likely be gradual. Over half of Americans own smartphones. In order for smartphones to truly replace wallets, the percentage of Americans that own mobile devices needs to reach over 90 percent. In order to better put things in perspective, information recently leaked that the iPhone 6 will be a wallet. Is it happenstance, or has tech giant Apple predicted the future of digital payments?
Top image ©GL Stock Images
Los Angeles, CA (Gawkwire) April 17, 2012 – Certified Hosting (certifiedhosting.com), a leading web hosting provider, announced today that the company is accepting Bitcoin payments. As more consumers start using this digital currency to send and receive payments around the world, Certified Hosting’s announcement gives customers more payment flexibility and helps to support this rapidly growing economy.
“Accepting Bitcoin payments is very exciting for us,” says Kacy Carlsen, co-founder and CEO of Certified Hosting. “The way that people make payments is changing, and Bitcoin presents a secure method for transferring money directly to its intended destination. We have already seen demand for the ability to pay for web hosting services with bitcoins, and we are pleased to make that possible for our customers.”
In 2009, Bitcoin was launched as a digital currency, creating a way to send and receive money without a central bank. By removing the institutions at the center of banking and finance, Bitcoin effectively eliminates the large fees levied by these organizations on transfers. The appeal of Bitcoin has led to significant growth in this fledgling economy, with the monetary base of Bitcoin valued at more than $ 600 million and more companies offering Bitcoin payment options. Certified Hosting is one of the few web hosting providers to support Bitcoin payments, allowing those customers that use bitcoins to pay for their services securely, directly from their wallets.
“It is very important that vendors and service providers keep up with what their customers want,” says Carlsen. “Simply, we saw many of our existing customers and new leads were using bitcoins and felt it was our obligation to enable them to use this payment method with us. Bitcoin is a growing, unstable currency, but for those customers who want to eliminate central banks and improve payment privacy, it is a popular choice.”
In a conventional banking system, accounts are always linked to individuals. When customers make a purchase from a store, that store may be given confidential payment details and personal identification information such as a name and address. Bitcoin addresses these privacy issues by eliminating the account system. Whenever bitcoins are transferred, they are sent to a specific Bitcoin address that is identified by a string of characters. No personal information is linked to this address. In addition, one user may have multiple accounts, making it almost impossible to find out the total worth of an individual. Using bitcoins to pay for web hosting from Certified Hosting, customers will experience more privacy and higher security than most other payment methods.
“Data is our business, and we know better than most how data can be exploited,” says Carlsen. “We proactively encourage our customers to take their privacy and security seriously online, but the process of making a payment is by definition a security risk. Although we are very confident that the security practices of the payment card and banking industries are effective, supporting bitcoin payments gives customers another way to keep their data private.”
Current and prospective customers who would like to explore Certified Hosting’s range of web hosting plans are encouraged to visit certifiedhosting.com.
About Certified Hosting
Certified Hosting was established in 1999 as a Southern California-based unlimited web hosting company to provide shared hosting, reseller hosting, and managed dedicated servers to Fortune 500 companies, small businesses, and individuals throughout the world. Recognizing that each client has unique goals, Certified Hosting tailors hosting services to meet the individualized service needs of clients in many specific industries. Some, but not all, Certified Hosting services include unlimited FFmpeg hosting, Flash hosting, WordPress hosting, Dolphin hosting, Elgg hosting, Magento, Joomla, Drupal and PHPmotion hosting, among many other technologies used by webmasters and business owners.
For more information about Certified Hosting, visit http://www.certifiedhosting.com/.
Certified Hosting (Press: Young Copy)
dave [at] youngcopy.com
If you own a website, you may understand that not all visitors are buyers. Many times, it so happens that visitors abandon the shopping cart with products in it. They never checkout or make a payment. Designing an attractive and efficient online payment means is therefore necessary.
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