Accepting Bitcoin for payment may be an effective way to drum up more business with fewer fees and greater privacy for customers, according to startup companies.
Tomcar Australia, which manufactures all-terrain vehicles in Melbourne, announced today that it will accept payments in Bitcoin. The company previously used Bitcoins to pay one of its suppliers, according to the startup’s CEO David Brim.
“We thought, if we’re using Bitcoin, why not accept it?”
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Tomcar has a small staff of less than 10 people, and sells vehicles directly through its website rather than through dealerships. “We have taken a tech startup approach to our business,” Brim told Techworld Australia.
It was only natural, then, that the company became interested in Bitcoin. Tomcar first dealt in the currency to pay a supplier overseas, and a major benefit was that the company did not have to pay large fees on the international transactions, said Brim.
Fees ranged from 6 to 12 per cent with fiat currency, but with Bitcoin it’s 1 per cent, he said. “That’s a big savings on a $300,000 to $400,000 payment [to the supplier].”
“Electronic payments should facilitate commerce, not stifle it with margin-eroding fees.”
The pseudoanonymity of Bitcoin was a major reason VPN provider VPNSecure chose to accept Bitcoin, said the company’s director Shayne McCulloch.
“It comes hand in hand with the type of business that we have. We’re providing a privacy service for our customers and Bitcoin ... provides privacy with regards to paying,” he said.
He said Bitcoin is more private than PayPal, which has “got all of your details.”
McCulloch added that Bitcoin seemed like a good match for the technically minded people that use VPN services. “They’re the type of people that would also use Bitcoin,” he said.
Jamie McIntyre, CEO of the 21st Century Education and Media group, said the company sees accepting Bitcoin as a way to generate new sales.
“It is a relatively safe currency, except for its volatility in price,” he said.
“Nevertheless, it has a huge upside and if only a percentage of sales are done via Bitcoin, businesses have very little to lose but a lot more to gain by tapping in to new customers.”
The other companies using Bitcoin also said they believed accepting the digital currency would boost business.
“Because it is such a different way to pay online, it just opens up avenues for additional customers that you would not normally get,” said McCulloch.
Right now, Bitcoin sales only represent a low percentage of payments on VPNSecure compared with other methods, he said.
“We expect Bitcoin sales to rise significantly over the coming 12 months as merchants, the Bitcoin community and [VPNSecure’s payment provider] CoinJar help establish the currency further into the mainstream markets.”
Brim said, “Smart marketers have always understood the power of payment methods.”
“If you think back to the emergence of credit cards, it was an advantage to accept them in the early days—not everyone did. Bitcoin is just like that. The fast adopters get the fast traction initially.”
Next page: A risky currency?