NEW YORK – Earlier this week, the Wall Street Journal
highlighted the rising popularity of the Bitcoin among small businesses.
The lure for businesses for accepting the virtual currency
is its avoidance of credit card processing fees. Additionally, its acceptance
attracts customers who appreciate the technological novelty of paying for
products with virtual currency.
Adam Sah, co-owner of a specialty grocery business, began
accepting Bitcoin in April. He posted “Bitcoin Accepted Here” stickers on his
three store windows, and two months later, at least one customers purchases
items with the digital money every day at each location, he said.
The novelty has not yet resonated among mainstream
retailers. Tom Litchford, vice president of retail technology for the National
Retail Federation, said Bitcoin has not yet come up for discussion at industry
meetings. "Where is the motivation for the consumer?" he asked.
"Why would I not use my credit card where I get [airline] miles?"
Small merchants take a different view. Not only due Bitcoins
offer lower swipe fees (less than 1%) than traditional credit cards, a Bitcoin
transaction is final and cannot be disputed. And some merchants favor it over
cash because transactions are completed quickly via the Internet and avoid cash
handling hassles.
"Cash is a pain," said Aaron Rollins, a cosmetic
surgeon in Beverly Hills, Calif. "I got to count [cash] and bring it to
the bank."
A critical risk for merchants using Bitcoin is that the
virtual currency could become worthless if it doesn’t catch on (it is traded
via online exchanges). However, some merchants say they aren’t holding on to
the digital money as an investment. Rather, they are quickly converting it into
traditional currency.
An additional concern involves banking regulators, who
recently issued warnings to virtual currency exchanges and others dealing with
the bitcoin that they could be closed down if their activities breach
money-transmission laws.