The acceptance of bitcoin as an alternative payment method has been a contentious topic for quite some time now. While many renowned retailers have accepted it alongside Paypal and other digital wallets, the virtual asset still has a long way to go before it is widely accepted by merchants in the Indian retail ecosystem. However, the good news is, despite the ongoing debate on bitcoins, their acceptance is rising swiftly globally.
While its early adoption by illicit online market Silk Road fetched the virtual asset some ill-repute, after the Federal Bureau of Investigation forced Silk Road to shut down in October 2013, many legitimate e-tailers started accepting the currency. Though its initial acceptance was led by relatively smaller merchants to gain a foothold within the enthusiastic bitcoin community, its acceptance is increasing among reputed brands as well.
Some of the renowned names accepting bitcoins online are Dell, Dish Network and Expedia. In fact, according to a First Annapolis Consulting analysis, back in 2014 itself, European merchants processed around $40 million in merely three quarters, posting year-on-year growth of 1,000%. These numbers are indicative of the current growth curve of the virtual asset. While we still await accurate numbers on the growth rate of bitcoins, we are certain of the trend accelerating this year, with more major merchants accepting bitcoins and many progressive countries embracing the digital currency. In Japan, for example, the regulators have recognised and started accepting the currency.
As per a survey by Japan's NHK Broadcasting Culture Research Institute, bitcoin acceptance grew nearly five-fold between 2015 and 2016. To give a better perspective, its usage shot up from 900 to 4,200 locations. After Japan officially recognised bitcoin as a payment method in April, point-of-sale system AirRegi is set to add bitcoin acceptance at up to 260,000 locations. In view of these developments, Chinese tourists visiting Japan might be the first adopters of the digital currency as the country’s most popular mobile wallet Alipay is integrated with AirRegi. This allows tourists to pay with bitcoin and avoid foreign transaction fees. These developments are only indicative of the impact the introduction of bitcoin can have on the Indian retail sector. Furthermore, Coincheck, a major Japanese bitcoin exchange, has enabled the country's citizens to pay power bills with bitcoins through its payment processor ResuPress.
As of now, bitcoin seems perfect for e-commerce merchants, with the customer demographic of tech-savvy males aged between 18 and 45 years. Retailers could benefit from bitcoin in various ways. For example, it could be an opportunity to drive incremental customers. Besides, it has a lower cost of acceptance than credit cards etc.
To conclude, we must understand that payment is a complex industry and, with the emerging alternative payment methods, it is all set to undergo a major disruption. With devices ranging from refrigerators to smartwatches featuring payment capabilities, consumer payment behaviour is also likely to change. Likewise, blockchain technology, the protocol that underlies bitcoin, could change how consumer card payments are verified.
Hesham Rehman is co-founder and CEO of Bitxoxo, a bitcoin exchange startup.
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