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Hardly-Known Facts about Bitcoin Payments for E-Commerce

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Even though it is the world’s best known cryptocurrency there are a great many facts about bitcoin; that even established ecommerce entrepreneurs are often unaware of. Some of the little-known facts about bitcoin are absolutely astounding and many of them are fascinating.

Detailed knowledge of these facts can help online merchants reduce costs and expand their business. An analysis of these facts can show one how cryptocurrencies work; and demonstrate their potential for expanding business, reducing transaction costs and increasing cash flow and profit.

Some Truly Fascinating but Little Known Facts about Bitcoin Payment Include:

  • It is possible to make bitcoin payments that comply with Anti-Money-Laundering Laws (AML). Payment21 is a Swiss company that specializes in secure bitcoin payment processing for regulated organizations including state-licensed utilities, government agencies, travel agencies, airlines, healthcare providers, licensed gaming operators, branded consumer products, publicly-traded companies and even audited charities. All Payment 21 transactions are totally AML-compliant, secured by Swiss Data Protection, and fully integrated with Switzerland’s famous banking system. That means it is possible to receive bitcoin payments without violating any regulations or laws.

  • Bitcoin payments that comply with most banking regulations exist. There are payment processors such as Payment21 that specialize in regulatory-compliant bitcoin payments. Payment21 is fully compliant will all Swiss banking regulations, the US Patriot Act, US laws regarding contractual liability, and regulations from European Payment Institutions.

 

  • There is now a bitcoin-payment processing system that meets U.S banking standards. Payment21’s Check21 SAAS can clear check payments from bitcoin in US dollars through the Automated Clearing House (ACH). That means quick deposit in US bank accounts because ACH is the electronic payment system used by Federal Deposit Insurance Corporation (FDIC) regulated banks in the United States. This also means that merchants who use bitcoin can send checks and electronic fund transfers to American customers and vendors in US dollars.

 

  • When used properly bitcoin payments can eliminate chargebacks. A chargeback occurs when a payment processor reverses a payment, forcing the merchant to eat the expense and related charges. This occurs because cryptocurrencies can provide almost instant verification of a payment. A merchant can verify that funds are available before approving a transaction. A further level of transparency is added by bitcoin processors; such as Payment 21, that specialize in payment verification.

  • Bitcoin processors such as Payment21 can reduce losses due to fraud and error by providing fast verification of payment. Many online merchants suffer significant losses when they send out a shipment, then learn that payment has been delayed or declined.

 

  • Bitcoin payment processing is often cheaper than traditional payment processing. Most bitcoin processors charge a fee of around 1%, many banks, credit card companies and online solutions such as PayPal charge 3% or more. This can seriously cut into profits at businesses with a low profit margin, and individuals selling low priced products. Such enterprises can sometimes make more money by switching to bitcoin.

 

  • Bitcoin is legally a commodity in the United States. The US Commodity Futures Trading Commission; the agency that regulates America’s commodity markets, made that declaration in September 2015.[1] The world’s largest futures and derivative exchange CME Group Inc. which operates exchanges in Chicago and New York, is laying the ground work for transforming bitcoin into a publicly-traded commodity with its CME CF Bitcoin Reference Rate & CME Bitcoin Real Time Index.

  • The United States government regards Bitcoins as property rather than currency. America’s national tax collector; the Internal Revenue Service or IRS, taxes bitcoin as person property rather than currency. That means income from bitcoin is actually taxed at a lower rate than income from many other investments.[2]

 

  • Bitcoin is taxable in America. In the United States the Internal Revenue Service regards bitcoin as ordinary income and not capital gains. Among other things, that means US residents and American citizens living abroad have to list income from bitcoin on their tax returns. It also means bitcoin is subject to state income taxes in the USA.[3]

 

  • Bitcoin is exempt from the VAT (value added tax) in Europe. The European Court of Justice, the European Union’s Supreme Court ruled that bitcoin transactions are exempt from the VAT because the digital medium is a currency in October 2015. [4]

  • It might be possible to use bitcoin to process tens of thousands of transactions a second. A proposed bitcoin-processing application called the Thunder Network might be capable of processing up to 100,000 transactions a second. Thunder is an open sourced platform similar to Linux that is being developed by a Luxemburg based company called Blockchain. Anybody can download and experiment with it here.

 

  • There are a number of efforts develop an “Apple Pay” for bitcoin. One of the most promising is the British open-sourced project Plutus.it Tap and Pay.[5] Plutus utilizes the same near-field communications (NFC) wireless technology that Apple Pay uses to let people pay at cash registers with bitcoin or ethereum. The technology is not available yet but it has been tested at businesses in the United Kingdom, including coffee shops and a Tesco grocery store.

 

  • PayPal (NASDAQ: PYPL) is in the bitcoin business. Braintree; a subsidiary of the payment-processing giant accepts bitcoin as a payment method. Braintree processed payments for a wide variety of customers in the United States and other countries. Braintree also owns and operates the popular mobile payment app Venmo.

  • Bitcoin’s potential for growth is vast because there were only 16.087 million bitcoins in circulation on January 5, 2017. In contrast there was $1.43 trillion worth of US currency in circulation on October 20, 2016, according the Federal Reserve System, America’s central bank.

 

  • Nobody knows how many bitcoin users there; are but there were 11.48 million bitcoin wallets in existence in January 2017 according to Blockchain.info. Each bitcoin wallet is a potential customer for an online merchant.

 

  • Bitcoin adoption is growing at an incredible speed. The number of bitcoin wallets doubled in 2016. There were 5.556 million bitcoin wallets in January 2016 and 11.48 million in January 2017 according to Blockchain.info. If that figure is correct the number of bitcoin users grew by 50% in 2016.

Bitcoin is now becoming widely accepted as a mainstream payment processing solution. Every entity that conducts business online needs to consider adopting bitcoin and cryptocurrency payment processing.

[1] http://www.cnbc.com/2015/09/18/bitcoin-now-classed-as-a-commodity-in-the-us.html

[2] https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidance

[3] https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidance

[4] http://www.coindesk.com/bitcoin-is-exempt-from-vat-says-european-court-of-justice/

[5] https://plutus.it/