When I get into a discussion about Bitcoin with someone, I like to bring up the coming wave of Bitcoin discounts when they say that bitcoins have no intrinsic value. Most people would agree that one of the reasons the US dollar has value is the fact that Americans are forced to use it to pay their taxes. There is no other currency that can be used to pay taxes, which gives the US dollar an underlying value in our daily lives. A similar concept applies to Bitcoin. If you want to use the most advanced payment system man has ever created, then you’ll have to use bitcoins. On top of that, you will soon need to use bitcoins if you want to get the best price from certain types of merchants and shop owners.
Gyft is a gift card seller that many bitcoiners use to shop at places like Target, Gap, and other major retailers with their bitcoins. Gyft offers 3% cash back on all purchases of gift cards with bitcoins. Why do they do this? They offer this deal because Bitcoin removes a lot of the extra expenses that go along with credit cards and PayPal. They are able to lower their costs by accepting payments through Bitcoin, and they pass those savings onto the customer.
The Cash Discount
Although this is not how it works everywhere in the world, there are plenty of small restaurants, gas stations, and convenience stores that offer some sort of discount when you pay in cash. Some of these establishments will also require that you spend at least ten dollars if you’re going to use a credit card in their store. This is due to the fact that credit card processing usually comes with a minimum fee of around $0.30. When you have a $0.33 processing fee on the purchase of a $1 candy bar, you’re probably actually losing money over the long term. You also have to remember that each chargeback can come with a fee between $20 and $100.
The Other Six Billion
Andreas Antonopoulos likes to talk about the “other six billion” when it comes to using Bitcoin as a bank account, but this argument also applies to merchants who don’t do business in the United States or Europe. Processing credit card transactions becomes even more expensive in these parts of the world, and this is where Bitcoin is really going to take off as a payment system and form of money. Discount rates on merchant accounts in these “high-risk” areas are much higher, and sometimes a payment processor like PayPal doesn’t want to do business in these places at all. Kenya actually uses the M-PESA mobile payment system where fees hover around the 5% mark. Merchant processing fees are another reason as to why Bitcoin will be about the other six billion first. Even if you’re a business in the United States, you will notice an increased fee if you accept customers from other countries.