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    Accepting BitCoin and LiteCoin currencies to increase Conversion rate


    Hello everyone... I've been a long time lurker on this site and could find most everything I was looking for easily... except on the issue of litecoin/bitcoin payment processors and their potential to increase conversions. If this is the wrong forum, sorry. I only found the eCommerce forum which seemed closed.

    Basically it seems like BitCoin/Litecoin and other cryptocurrencies are here to stay, unless they are globally outlawed, and even then I still see their usefulness. Recently in the news, OverStock announced it's starting to accept Btc and received over $100k usd in revenue through Bitcoin the next day. Zynga started doing the same recently and it seems like more merchants are adopting this trend.

    So far I found 2 Bitcoin payment processors being Bitpay.com and GoCoin.com. Between the two, only GoCoin.com accepts LiteCoin payments (I think they're the only one that processes Litecoin too.) The good news is through either one I can still get paid in USD and not have to deal with the virtual currency myself.

    My question is, has anyone started accepting bitcoin payments? And if so, have you seen better conversions? Also, would it be wise to choose GoCoin to keep payment options as many as possible?

    Thanks for any feedback
    Last edited by dzine; Feb 28th, 2014 at 02:05 AM.
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    Great question TheDan!

    I haven't personally accepted bitcoin payments, though it's reasonable to guess that it would increase your conversion rate. The idea being that some people who would otherwise be reluctant to buy, will instead buy if they can pay in bitcoin. In this case, obviously then GoCoin is better since your goal is to expand payment options to the maximum.

    Some points of caution though:
    - My understanding is that BitCoin's value is extremely volatile. Will you happily send a shirt to a customer if it turns out that tomorrow his payment is worth 40% less USD? How do you address that volatility? Do the payment processors take the risk?
    - It's equally possible that this won't increase conversions, because you're likely already accepting people's preferred modes of payment - credit cards + paypal. If that's correct, it's a question whether you'll really do better with BitCoin.
    - Quality vs quantity - In The Four Hour Workweek, Tim Ferriss advises refusing checks, money orders and certain other inconvenient modes of payment, as they're associated with the most finicky customers who require the most support. If you decide to test this out, you should measure any possible impact on margins due to increased (decreased?) customer support requirements.
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    Originally Posted by GabrielG
    Great question TheDan!

    I haven't personally accepted bitcoin payments, though it's reasonable to guess that it would increase your conversion rate. The idea being that some people who would otherwise be reluctant to buy, will instead buy if they can pay in bitcoin. In this case, obviously then GoCoin is better since your goal is to expand payment options to the maximum.

    Some points of caution though:
    - My understanding is that BitCoin's value is extremely volatile. Will you happily send a shirt to a customer if it turns out that tomorrow his payment is worth 40% less USD? How do you address that volatility? Do the payment processors take the risk?
    - It's equally possible that this won't increase conversions, because you're likely already accepting people's preferred modes of payment - credit cards + paypal. If that's correct, it's a question whether you'll really do better with BitCoin.
    - Quality vs quantity - In The Four Hour Workweek, Tim Ferriss advises refusing checks, money orders and certain other inconvenient modes of payment, as they're associated with the most finicky customers who require the most support. If you decide to test this out, you should measure any possible impact on margins due to increased (decreased?) customer support requirements.
    Great, a response, thanks! And you have some good points, I'll explain the best how I understand it, but I also need more info

    1. Bitcoin does seem very volatile, especially with the Mt. Gox situation going on, though I think Bitcoin is only suffering temporarily from that. The Gox situation is not the same (hopefully) for other exchanges.

    I don't know how long GoCoin takes to process the payment, but they advertise as assuming and taking over the risk associated with volatility... So the merchant still gets paid the price they are asking deposited to their bank account

    2. You're probably right on the conversion increase not changing much, and it may depend on the niche you're in. TigerDirect for example sells video cards and other hardware used to mine Bitcoin/Litecoin etc. Once they accepted those methods of payment it makes sense their revenues would go way up by selling to the miners who have lots of digital currency. I don't think it will directly increase conversions, but it does mean you can list your business in directories for merchants that accept bitcoin - so you open your storefront to a new shopper. I read Overstock did nearly 1 million in additional business through Bitcoin

    3. Not sure on the quality vs. quantity part. This seems all virtual and very convenient if GoCoin wires money to your account

    Thanks for the response! More to think about
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    I can see how being listed in directories / getting PR from it would increase rankings and generate more of those sales. The question is whether that's a worthwhile way to improve your SEO.

    From GoCoin's FAQ:
    GoCoin will not store the value of the Bitcoins you receive from your customers for more than a reasonable amount of time to complete a transaction. Instead, we will exchange the Bitcoin at a Bitcoin exchange and pay you in fiat currency. By using the Payment Gateway, you authorize us to receive Bitcoins and to exchange them on your behalf and to take any and all actions that we think are necessary or desirable to provide the Payment Gateway and to comply with applicable laws.

    9.1 Fees. We charge a processing fee on all transactions and reserve the right to set these fees and change them from time to time by notice in writing to you, by publishing notice of the same on the GoCoin Website(s) or by notifying you via your account. The proceeds payable to you will be the fiat currency equivalent of the amount of Bitcoins processed for you less our fees. Your continued use of the Payment Gateway after we notify you of any change in our fees constitutes your acceptance of such change.

    Meaning you both are at risk from the volatility imho.
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    Look at the vendors you quoted:

    "Basically it seems like BitCoin/Litecoin and other cryptocurrencies are here to stay, unless they are globally outlawed, and even then I still see their usefulness. Recently in the news, OverStock announced it's starting to accept Btc and received over $100k usd in revenue through Bitcoin the next day. Zynga started doing the same recently and it seems like more merchants are adopting this trend."

    Fot those types of vendors, it makes sence to accept as many payment types as possible. If you looked at bitcoins as part of their total revenue? I bet it falls in the 1 percentile range. For a large ecommerce store, that is well known, I think it makes sense. Like newegg for example. If they accepted bitcoins I could see it being beneficial. If Joe's Plumbing started accepting bitcoins? Not at all, lol. Depends on the client, but I don't really think it makes sense for small to mid sized businesses to bother with it at this point.

    Comments on this post

    • GabrielG agrees : Great point on segmenting who this is useful for / not useful for.
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    Sorry for any typos in that last post, it's late, and after a long day at the office, lol.

    BTW I'm not saying that accepting bitcoins is a bad idea, I just don't think it makes sense for 90% of stores out there. Here is why:

    1. Most people probably don't even know what a bitcoin is, much less how to obtain one.
    2. The orginal post showed quotingOverstock and Zenga, vendors which make millions of dollars a DAY. Implementing a bitcoin payment strategy is probably simple for them ,and in the long run, probably makes sense. If they can accept an extra 100-200k in revenue through bitcoins, so be it. Say you have a small or medium jewelry shop for example. Betty Sue is looking for a new ring. Betty Sue has a visa debit card. Betty Sue is going to use said visa card to checkout, because that's what she is used to, and familiar with.

    Now for my newegg example in the post above:
    Newegg sells low-mid-high end computer parts. Jack has built a high end PC, with 3 or 4 graphics cards capable of mining bitcoins. He successfully mines a few. During this process, he decides he wants to build a computer for his friend/wife/kid, and has a small stash of bitcoins burning a hole in his pocket. He goes to newegg, picks out what he wants, pays with said bitcoins, and viola. He has computer parts on his desk within a week.

    I hope no one finds this post offensive, or derogatory. I'm just trying to put it in perspective. The average consumer doesnt care or is ignorant of bitcoins, and what they are. In some business models, it makes sense.

    Comments on this post

    • GabrielG agrees : It wasn't offensive, just to the point and insightful.

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