How Online Services Will Help Bitcoin Adoption

It isn't just merchants who will encourage customers to use bitcoin.

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Bitcoin has become increasingly popular thanks to the support of various merchants both online and in the high street. It's going to take more than your local coffee shop and electronics store to make this cryptocurrency really shine, though.

Even the support of large companies such as Microsoft and Overstock will only take bitcoin so far in the public eye. So what is going to really accelerate its adoption?

Financial transactions both online and offline rely on companies to process the payments. Many online e-commerce stores use the same underlying payment processors to sell a variety of products.

If we can persuade these services to be bitcoin-friendly, then all of the online stores and transactions that they support can also become bitcoin friendly, too.

Luckily, several of these services and platforms are embracing bitcoin as an option.

Working With Bitcoin Payment Processors

These payment networks are supporting bitcoin by working with specialist bitcoin payment processors. Specialist bitcoin payment companies take bitcoins collected by merchants and convert them immediately into fiat currency so that those merchants don't have to hold bitcoins as assets. This reduces the risk for merchants, who don't want to worry about the tax implications of holding bitcoin themselves.

By working with bitcoin payment processing services, conventional payment processors instantly open up bitcoin options for a vast array of firms.

So, who is doing it?

PayPal

In September 2014, PayPal announced that it was partnering with three bitcoin payment processors: BitPay, Coinbase, and GoCoin. With their help, the company will now offer PayPal merchants the chance to accept bitcoin in exchange for digital downloadable goods.

Thanks to PayPal's announcement, if you are an e-commerce store selling music, say, or online games, you can now take bitcoin payments online using PayPal's service, without having to make any extra effort to deal with a specialist bitcoin payment processor.

It effectively opens up bitcoin to a vast array of PayPal-enabled sellers.

Square

Square is a payment system that offers easy credit card processing for businesses using little more than an iPhone or iPad. It enables them to start accepting credit cards via Square's service without having to go through the rigmarole of registering with a credit card merchant processor.

Square, which lets you read credit cards with an iPhone, now lets you accept bitcoins via its service. That means that any Square-enabled retailer can now take bitcoin, as long as they have been preapproved by the company.

Braintree

Braintree is another company that helps businesses process credit card payments, making it relatively easy to get merchant accounts and payment gateways. In January 2015, the company launched a beta service that would enable its merchants in the US to accept bitcoin payments, in conjunction with bitcoin payment processor Coinbase.

Braintree’s bitcoin support is interesting for two reasons. Firstly, it is now owned by PayPal. That eBay, which owns PayPal, is introducing bitcoin support across its properties speaks volumes for the cryptocurrency's prospects among A-list online merchants in the future.

Secondly, Braintree supports a very healthy base of notable online merchants, including GitHub, Dropbox, Livingsocial, and Basecamp. While not all (if any) of these currently take bitcoin, the point is that they now have the capability to the payment processor, making it easier to make the jump in the future.

Stripe

Stripe is a competitor to Braintree, and offers a similar service, enabling online companies to gain credit card merchant capabilities relatively quickly and easily. Among Stripe’s customers are crowdfunding site Kickstarter, Twitter, and ridesharing firm Lyft. 

Stripe went live with its bitcoin processing capabilities in February 2015. Its ability to process bitcoin on behalf of its clients opens up the capability to a vast array of online digital start-ups.

Trickling through to e-commerce platform providers

One of the exciting things about bitcoin adoption is how e-commerce platform providers are starting to take notice.

These are the companies that provide quick and easy online store services to small businesses and solopreneurs.

One of Stripe's customers is Canadian e-commerce platform provider Shopify, which began accepting bitcoin directly through bitcoin payment processors before Stripe introduced that capability.

Shopify’s support opens up bitcoin capability to a vast array of different small e-commerce stores (and some larger ones).

As these payments service providers and e-commerce platforms continue to adopt and promote bitcoin as an alternative payment mechanism, it will open the floodgates for many merchants who may have been on the fence before. By reducing risks like credit card chargeback fraud and fees, bitcoin provides merchants with new opportunities to drive down costs and risk.