Bitcoin merchants don’t necessarily have to use third-party payments processors like Coinbase and BitPay. Using APIs such as Blockchain’s Receive Payments API (or by creating one’s own), it’s possible to accept bitcoins without trusting a third party or paying them fees. However, most Bitcoin merchants still use services like Coinbase because getting set up is a lot easier. Coinbase has recently grabbed headlines for partnering with companies such as Dell and Expedia, leaving its competitors like BitPay behind. However, that may soon change with BitPay’s recent announcement. BitPay has introduced a new free plan that offers unlimited basic payment processing forever.
How it Works
BitPay’s free plan is simple, and merchants can get started today. The free plan offers unlimited transactions, instant conversion from BTC to USD, daily bank deposits, retail POS solutions, eCommerce integrations, email support, no transaction fees, and access to all of BitPay’s plugins, APIs, and apps. That’s quite a lot for a free tier. Premium plans, which start at $300 a month, offer additional services such as phone support, VPN access, and QuickBooks integration. With its free plan, BitPay hopes to remove the costly barrier to entry for new businesses and bring one million merchants on board by the end of 2016.
“When we started BitPay in 2011, we saw an opportunity to finally give merchants around the world relief from interchange fees. By offering a basic plan that is free and unlimited, forever, we give merchants yet another reason to be excited about bitcoin.”
-Tony Gallippi, CEO of BitPay
Compare that to Coinbase’s pricing model. Coinbase charges a 1% plus $0.15 fee to convert bitcoins to a merchant’s local currency after the first $1,000,000 in sales (although getting paid in bitcoins is free). Coinbase’s pricing is still reasonable and competitive, but nothing is cheaper than free. Furthermore, BitPay’s free plan isn’t a limited time offer; this is the pricing model they’re going with from now on.
Why it Works
By going “freemium,” BitPay can afford to offer a free tier. Larger businesses who go for premium plans effectively pay for the free plan and keep BitPay profitable. BitPay has also raised over $32 million from investors. Finally, Bitcoin itself makes it possible for BitPay to offer a free service. Unlike traditional forms of payment, Bitcoin doesn’t have high transaction costs, makes peer-to-peer transactions simple, can be easily used in unbanked areas, and doesn’t have to deal with foreign exchanges and other fees for international transactions.
The Future of Bitcoin Acceptance
Today’s merchants lose hundreds of thousands of dollars in profits due to rising processing fees. Credit card companies can offer shoppers all sorts of rewards by charging merchants high interchange fees. Bitcoin, on the other hand, has practically no associated costs. And when companies like BitPay can make it easy and free to accept Bitcoin payments, it’s very likely that more and more companies will start accepting Bitcoin in the future.