eBay’s announcement this week that its Braintree unit plans to start accepting bitcoins in the next few months suggests that not only will consumers be able to benefit from having another payment option, but businesses will, too. Will eBay’s embrace of the controversial cryptocurrency be enough to encourage businesses to trade with one another in virtual currencies?
There’s no question that eBay’s B2B activity is gaining momentum. Earlier this summer, PYMNTS.com reported that eBay is seeing positive results in its Business & Industrial (B&I) sales category, which is devoted to B2B sales. In the fourth quarter last year, eBay reported B&I sales were growing at an annual rate of 17 percent, compared with 12 percent overall for eBay.com, Scot Wingo, CEO of ChannelAdvisor Corp., told Internet Retailer. ChannelAdvisor helps online companies sell through Amazon, eBay and other e-marketplaces.
Various companies, including Virgin Galactic, WordPress and Overstock.com, already accept bitcoins, but usually by using exchanges that will convert the currency into U.S. dollars. While Overstock.com says it keeps a percentage of the bitcoins it accepts for payment, it has not indicated plans to use them for its own B2B purchase activity.
Investment to payment
And there’s the rub. Many companies, and consumers, view bitcoins as investments, hoping the value of the currency will rise and generate income. That said, there’s a growing base of consumers and businesses that view bitcoins as viable payment tool as well.
What cryptocurrencies such as Bitcoin likely will require is a large B2B brand to kick start a sales trend by accepting the currency. eBay certainly provides the vehicle to get the process started.
Indeed, as CardVault reported earlier this year, Bitcoin’s introduction into the B2B market has been slow, but it might not take much to give it a push.
“A small step in that direction is eZanga.com’s partnership with Coinbase to start accepting bitcoin payments,” the publication noted. “The day-to-day swing in Bitcoin value has B2B businesses concerned with price-setting. Payment terms that can span 30 to 90 days may have a major effect on revenue for merchants because of the volatility.”
Bitcoin may have more success in international trade by simplifying and hastening the payment process. “Compared to more traditional methods of payment, Bitcoin could be a less-expensive option for international payments as well,” CoinVault noted. “As economies grow in Asia (especially China), domestic B2B companies might consider experimenting with the virtual currency.”
Recent events have helped to push international bitcoin use along. Alternet Payment Solutions, for example, has launched a worldwide bitcoin-processing platform that will provide payment methods for B2B commerce. Alternet has entered into a non-exclusive agent agreement to sell and support the BitPay platform into its customer base. This includes converting local currencies to bitcoins and bitcoins into U.S. dollars for B2B payments in the Americas, the Caribbean and Asia-Pacific.
“Alternet is providing the next generation digital currency and payment ecosystem focused on three distinct segments of the marketplace, which includes comprehensive currency processing, identification and transmission,” company CEO Henryk Dabrowski commented in the Bitcoin announcement. “Our strategic agreement with BitPay will allow us to initiate our sales process with several potential clients in Latin America and the Asia-Pacific region. We believe that our backlog of opportunities will continue to grow globally, and we will generate our first revenues from this business in the fourth quarter of 2014.”
B2B debt-recovery companies also have started to embrace bitcoin acceptance. Earlier this year, for example, corporate debt-recovery firm Johnson, Morgan & White recently announced that it had begun accepting bitcoins as payment. The number of businesses accepting bitcoins now number in the thousands, despite its bad reputation.
In a statement he made while announcing the decision to accept bitcoins, Robert Cooper, the debt-recovery company's owner, noted that, despite its poor reputation, bitcoins are not alone in having their issues.
“Although bitcoins have recently had bad press with a federal lawsuit and indictment regarding money laundering on the infamous Silk Road website as well as allegations of the financing of drugs, gambling, and prostitution, we felt that these were isolated incidents,” he said. “Additionally, the instant payment aspect alongside the lack of bounced checks and/or credit card charge-backs made our decision simple.”
It’s likely eBay believes similarly, as its customers face similar issues. Indeed, as PYMNTS.com reported earlier this week, although the move is especially significant for Bitcoin, EBay’s actions will, by extension, give all digital payments a credibility boost.
“EBay, as the world’s biggest Web marketplace and operator of a global payments service, is the most significant business to date that’s embraced bitcoin. The move could potentially enable PayPal’s 152 million registered accounts to transact using the virtual currency, spurring wider use and acceptance of bitcoin,” Bloomberg reported. It quoted Wedbush Securities analyst Gil Luria saying: “PayPal integrating Bitcoin into Braintree is a very substantial development. Not only will it make it possible for some of the fastest-growing apps to integrate Bitcoin seamlessly, it opens the door for PayPal to integrate Bitcoin into its main wallet functionality. If that happens, millions of retailers will de facto be accepting Bitcoin overnight.”