eGifter is an online retailer specializing in electronic gift cards from a very large assortment of businesses. eGifter makes it easy to send gift cards to anyone instantly. What makes eGifter more attractive than other companies that offer similar services? In addition to offering over 100 brands, they also accept Bitcoin, Litecoin and Dogecoin as payment options. Litecoin and Dogecoin are the recent crypto currencies to be accepted by eGifter.
I had the opportunity to speak with Tyler Roye, CEO of eGifter, about Bitcoin and cryptocurrencies in general. He is a big advocate for Bitcoin, and he sees it as a viable, better alternative to bank and credit card transactions. He also sees Bitcoin and cryptocurrencies as a way to take the power away from the banks and credit card processors and put it back in the hands of the consumer and businesses that have had their rights robbed. His insight gave me a new perspective on Bitcoin and how it will drive even more innovation in the future. He first talked to me about how it is going to affect credit card and payment processors.
[dropcap size=small]H[/dropcap]ere is what he started with:
2.5% of everything that gets transacted goes to banks and card processors. They do not feel enough competitive pressure to lower the price or add features. I have a feature I would like to see them add. Taking on the fraud from card not present retailers. Why is that my problem? Why can’t they give me a technology to do that? The answer is they are not motivated to do this by competitive price pressures.
I want them to define new technologies that are going to create a system that would promote less fraud. They are fat and happy and do not want to. They are going to have to respond to the emerging crypto currencies and they are going to respond by: 1st lower prices but they can only lower them so far before they say 2nd they are going to add some features, better add some benefit We are entering a time when hackers are going to focus on only digital transactions. Great I sell stored value, I sell digitally stored value. I just became even more of a target for hackers. I am ok with that as it is part of our IP stack, and it forces us to build a better mouse trap. That is one of our competitive differentiators. I would give my business to someone who could stop all that.
In the US, the telecom companies are all stomping down adoption of mobile payments in the US. During your presentation, you stated how in Europe and many other countries mobile payments are flourishing. Do you think that bitcoin can wedge itself into the mobile payments market?
I think Bitcoin is part of the equation. I am waiting for someone to do (for Bitcoin) like RedHat did for Linux. Someone to come in and say this whole open crypto currency thing is great, but I am going to provide that value-added wrapper around it to be another option. There are going to be plenty of other digital payment options and some of them are going to be commercial. Facebook credits are probably coming around soon and why wouldn’t they? It would be a great business model for them any transactions that could be initiated from their network they could get a percentage of. Why wouldn’t they go head-to-head with PayPal and get a percentage of that. If you’re Android and Apple you’re thinking to yourself: “that is my money; Visa, MasterCard, maybe I won’t even let you in”. Obviously they will let themselves in to fill their digital wallets but that might be all. You remember Microsoft, it’s their universe Google/apple they will leverage it. Remember when Microsoft was trying to shove Internet Explorer down our throats, it’s going to be just like that, where the banks are going to get the Justice Dept. to try and tell Google/Apple you have to allow more payment options than just Google and Apple apps. Then you have the phone companies that are going to want their piece of it. So, how many different digital payment currency options are there going to be three years from now or five years from now? I think it’s more of a start-up that’s going to come in and change the market. Apple is going to do their thing and get a piece of the market. What will be interesting is how the online mobile payment pie chart will look and just how much, or little, Visa, MasterCard, American Express and PayPal will have of it. I have to think Apple is going to have a piece of that pie chart. They are going to have to. I do not even have to ask if you have a smart phone, and it is either and iPhone or an Android I doubt anyone here has a Blackberry or windows phone. Unless the Justice Dept. steps in and stops it; Google and Apple will get a piece of that pie. It is going to be really disruptive. It annoys me that Apple asked us to take out the Bitcoin payment option, and we had to make it so that it took you outside of the app to make a Bitcoin payment. Then they changed their mind, and we had to take that out too. Now the only way you can do it is in a browser window on iOS. I have a mobile browser friendly version of our website so you can still access it, but I would rather have had it in the app.
When you decided to accept Bitcoin as a form of payment did you have any problems with any of the companies that maybe did not like Bitcoin?
No, maybe because they felt shielded from it. They got to sit back and watch its impact in our marketplace without the risk. Secretly, many of them wanted to experiment with it and through us they were able to see. So, no, we never really spoke about it. If there are companies that do not want it (Bitcoin) we can just turn off that option for their cards. I think what is happening as more of them see companies like Square and Stripe taking it on and then Overstock and Tiger Direct maybe enough to get more companies to accept it. You are going to see some much more conservative retailers that keep saying no, no, and no but call me when everyone else has done it. I would like to be a fly on the wall in any of those top 200 businesses, on the day Amazon announces they are going to be taking Bitcoin. You’re going to have some guy in the boardroom saying: “I told you we should have gotten ahead of this thing, and now we are chasing Amazon again… There is a whole community out there that is buying from Amazon and not from us!”
How do you feel about the US government’s recent regulation of Bitcoin?
I think the more regulation that comes in, the more it will give people a peace of mind. When the IRS designation came down, I was happy. I say bring it on, build us a nice safe box around this. It is going to be like when Verisign and others came in and made it so you could use credit cards on the internet. Pundits were saying, “No one would even put a credit card into the internet” and now look where we are. I think a lot of the fear part is over and in the next few months we will see more, at least neutral if not positive, stuff coming out for the most part.
With the IRS ruling that came down, for miners it can be a burdensome prospect with Bitcoin being considered both a property and mining as self-employment. It can hit mid-sized and larger mining operations hard. How do you see that affecting mining?
In come the entrepreneurs, they will make ways of accounting for the mining income and much more. Bitcoin has drawn many more entrepreneurial types than most new things, at least since the internet… Much like social media. The entrepreneurs will come in and solve this problem; it may be a rough year for some of the miners, but I cannot see it lasting long. You have bakeries that do not know how to do their taxes and in the Bitcoin crowd people are more able to program something that works rather than wait for someone else to do it.
How has taking Bitcoin for your business affected your business and life?
It’s been exciting. Our volume is greater than it would be, because of Bitcoin. This gives us more leverage and buying power going forward. It helps us with the other non-Bitcoin parts of the business; due to that, we attract other people we would not have before. It has had a positive impact across the board. Using Coinbase’s model allows for instant change into currency, so I do not have to explain the fluctuations to my investors or people in general. It is a perfect storm of all good, knock on wood, for the business.
Did you see a spike in sales when you announced Bitcoin was accepted at eGifter?
Yes, it was a surprising spike. We are a private company and don’t talk about numbers, but it was a substantial spike that continues to grow. We are continuing to innovate, and more things are coming up. We sell digital; multi-denominational, stored value and I would like to be able to sell that to you for whatever type of currency you have or feel like having. Whatever it is you have I want to be able to accept it for you. It is a common sense kind of business model, and I continue to innovate and light up those payment options.
Tyler has a keen business sense and love for the digital world, and it really has shown it with his company’s decision to accept Bitcoin and other crypto currencies. Always looking to innovate and be a leader not a follower has put eGifter in a strong position as it is a consumer favorite in the marketplace. I enjoyed talking with him and being able to see more of what drives his company’s choices in relation to payment processing with companies like Visa, MasterCard, PayPal and others. The way those companies act highlight just how much of an innovation Bitcoin is to the industry. I appreciate the time he took to give me a glimpse into eGifter, and I look forward to speaking with him again in the future. He sees a bright multifaceted future for Bitcoin and cryptocurrencies and is making sure eGifter is at the forefront of it all.