“What can you possibly buy with bitcoins?” – skeptics had been asking us by year 2011. It was still common to hear that question in 2012. Meanwhile, companies like BitPay were busy availing themselves of the extraordinary opportunities offered by this new economy, still small and immature, but definitely poised for the future rapid growth we can see today.
¿Y qué puedes comprar con bitcoins?, nos preguntaban los escépticos allí por el año 2011. Durante 2012, todavía era común escuchar esa pregunta, lanzada como una objeción en foros y blogs de la bitcoinósfera. Mientras tanto, empresas como BitPay aprovechaban las extraordinarias oportunidades que ofrecía aquella nueva economía, todavía pequeña e inmadura, y sentaban las bases de un crecimiento vertiginoso.
In a strategic move that could more than double the number of bitcoin merchants on its roster, BitPay has announced a partnership with 3dcart, a well-established eCommerce platform for online store owners. 3dcart CTO Jimmy Rodriguez recognizes the growing demand and popularity of bitcoin and was attracted to the simplicity and ease of use that BitPay brings to bitcoin:“Bitcoins are quickly becoming a popular form of payment online and BitPay simplifies it for internet retailers that want to offer it as a payment alternative, without the need of a deep understanding on Bitcoins. The built-in BitPay integration is one of the flag features of the new 3dcart 6.0 version.” – Jimmy Rodriguez, CTO of 3dcart
The partnership gives some major online merchants – including Bubba Gump Shrimp, Coffee Bean & Tea Leaf, and The New York Times – the option (not obligation) to enable bitcoin payments directly through 3dcart back-end tools. BitPay CEO Tony Gallippi explains the added value that BitPay will bring to 3dcart merchants:“Having BitPay embedded into 3dcart makes it very easy for merchants to setup a webstore and start accepting Bitcoin payments without writing any code. There is no setup or monthly subscription fee to use BitPay. Each Bitcoin transaction costs 0.99% of the total purchasing price, making it an affordable solution for every 3dcart store owner.” – Tony Gallippi, Co-Founder & CEO of BitPay
BitPay gives merchants the option to accept bitoin payments and instantly convert all, some, or none of the bitcoins into a bank deposit that clears in one business day. Merchants who choose to retain bitcoin payments must do so on a wallet of their choice; BitPay is strictly a payment processing service and does not offer wallet services. Bitcoin payments are processed by BitPay to a bitcoin address provided by the merchant.
Bitcoin to fiat exchange rates are set and preserved for 15 minutes at the time of transaction using an average rate from multiple exchanges. According to an update dated June 20, 2013 on the BitPay blog:Effective immediately, BitPay has temporarily stopped using Mt. Gox for determining the exchange rate for our invoices. The rate calculation that BitPay uses for each invoice is now as follows: 1. Pull the full Level II market depth, on the bid side, from multiple exchanges. 2. Merge the market depths into one Consolidated Level II table. 3. Calculate the blended clearing price for the amount of the invoice, assuming an auto-routing market sell order across all exchanges, with zero commission. BitPay is committed to offering the fairest possible rate to the buyer, while minimizing our counterparty risk.
BitPay uses a unique system to preserve the bitcoin/fiat exchange rate for up to 15 minutes after a merchant initiates a transaction. This gives the customer time to accept the transaction by sending the amount of bitcoins requested by the merchant. It also temporarily protects both parties from volatile price changes.
BitPay CEO Tony Gillippi was kind enough to answer some questions about the regulatory implications for merchants who accept bitcoin through BitPay. As it turns out, there really are none. Merchants are responsible for their own accounting of bitcoin income, which should be considered foreign currency for taxation purposes.
Other than that, neither BitPay nor its merchant subscribers are required to register with FinCEN as a MSB (Money Services Business.) Current regulatory requirements apply almost exclusively to bitcoin exchanges such as Mt. Gox and Tradehill and BitPay is not really an exchange; it simply facilitates trades between its merchant subscribers and multiple bitcoin exchanges.
BitPay’s merchant roster is increasing at a steady and impressive pace. BitPay was the only merchant-oriented payment solution in town for a while, however, Coinbase has recently shown renewed focus on its merchant solution. Coinbase might have somewhat of a competitive edge over BitPay since it offers a trusted wallet hosting service on top of its merchant service.
BitPay could significantly improve its service if it did two things: added a secure hosted wallet service and kept track of its subscribers bitcoin income for tax purposes. The partnership with 3dcart has great potential to attract thousands of online merchants to bitcoin. The easier it is for 3dcart merchants to accept bitcoin without having to setup a wallet and worry about accounting for taxes, the better.
3dcart has been informing its users of the integration and its benefits to merchants via marketing materials and social media outlets. BitPay and 3dcart will be holding a joint webinar on August 28th to explain the new payment platform to 3dcart merchants who want to learn more.
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