14 07 2014
3 Reasons Bitcoin Makes Sense for Merchants in Asia
Payment options have been evolving rather quickly over the past few years in Southeast Asia, but there are still plenty of spots in this region where advanced payment methods are simply not yet a viable option. E-wallet services and debit cards are the two most popular option at this time, but even these choices come with their own drawbacks. Merchants are often hit with high fees related to these payment options, and those increased costs are then passed onto consumers. Bitcoin can bring a large number of new opportunities to the payment landscape in Southeast Asia, and this should be one of the largest areas of growth for cryptocurrency as a whole over the next five to ten years.
1. Lower Transaction Fees
While the current payments options available in Southeast Asia are convenient for shoppers, they can be a gigantic pain for small businesses. First of all, roughly 3-4% of each transaction goes to a payment processing company, such as PayPal or MOL. This is one of the main reasons that so many merchants either decide to only accept cash at their store or charge an extra fee for customers who wish to use a credit card or online wallet.
Bitcoin comes with extremely low transaction costs. The actual cost of a transaction tends to vary over time, but the current flat rate is roughly five US cents per transaction. This is a vast improvement over most of the other options available on the market right now where the minimum fee is usually around $0.30, which is then combined with the 3-4% merchant discount rate.
Many new merchants believe that the percentage fee associated with processing transactions will be the worst of their worries, but the reality is that chargebacks are the real killer. Each chargeback can come with a fee anywhere between $20 and $30, and these kinds of chargeback disputes are almost always decided in favor of the consumer rather than the merchant. Not only is the merchant out the money that was sent to them to pay for a product or service, but they also have a large fee to pay on top of that original loss. At the end of the day, the current payment options are impractical for merchants in Southeast Asia.
One of the main features of Bitcoin is that transactions cannot be reversed. This means that merchants do not have to worry about people attempting fraudulent chargebacks on their purchases months after the transaction took place. In this sense, bitcoins are as good as cash. In fact, they’re actually better than cash because they cannot be counterfeited.
3. Online Sales on the Rise
It’s also important to note that online sales are also growing in Southeast Asia as more people gain access to the digital economy. The basic infrastructure to connect this population of more than 600 million people to the Internet is still being built, but the transition from basic Internet availability to ecommerce solutions has been swift. While this new development should definitely be viewed as a positive, it’s important to note that most of the chargebacks that take place these days are on the Internet. It’s much easier for fraudulent purchases to be made online rather than in a face to face environment, which is why the power of irreversible payments provided by Bitcoin could be extremely important for this part of the world.
A Clear Advantage
When comparing the costs of accepting credit cards and e-wallet transactions to Bitcoin, it’s easy to understand why so many people around the world are excited about this new payment system and currency. Although there is still work to be done when it comes to getting bitcoins into the hands of consumers, the benefits of accepting Bitcoin as a merchant should be obvious.