“I talk to cool hip tech brands who are spending all this money on marketing right now,” says BitPay Chief Commercial Officer Sonny Singh. “All they have to do is accept bitcoin to get new customers. The whole crypto community, which has been valued as high as $800 Billion, would know about these brands. [They] would probably be doing about 5-10% of their online sales in bitcoin. And of that 5-10%, nearly 60% of those customers will be first-time customers.”
Singh, a financial technology veteran hired by BitPay for his ability to bring new products to market, believes Bitcoin is the least expensive way for brands to acquire new customers quickly.
“Yet, cool hip tech brands are the ones not doing it,” he says. “It boggles my mind when I talk to these mid-tier brands and they don’t even know about [bitcoin]. These are cool tech kids that are running these companies, backed by VCs. And they don’t even understand how Bitcoin works?”
Global brands like Microsoft, NewEgg, ATT, Avnet, Dish Networks all accept Bitcoin, but very few silicon valley startups or technology unicorns do.
“I get snail mail every day from new startups trying to get me to buy their sleeping mattresses or eye glasses when they could increase their sales dramatically by accepting Bitcoin,” he says. They’ll say they’re too busy or that they can’t hold bitcoin on their balance sheet.
“And we tell them they don’t have to,” says Singh. “They can settle in US dollars the next day. It is still not interesting to them. They’re going to get [potentially millions] in new revenue per year. Do they care about that? Still, they say, it’s not a fit for them right now or they’re too busy.”
According to Singh, merchants tell BitPay – which processed over $1 billion-worth of cryptocurrency transactions in 2018 for the second year in a row – that 53% of their customers that spend with bitcoin are new customers. Since you’re not spending much money to acquire these customers, the customer acquisition cost is, therefore, relatively low. And growing companies need revenue the most. But, while they might pay millions of dollars for an advertisement, they won’t implement Bitcoin and court its community.
“If you want to go after a community that is 18-45, affluent, 80% male, then the quickest way to do that [for those companies] is to accept Bitcoin,” says Singh.
When compared with credit cards, BitPay offers real savings. Accepting Bitcoin through BitPay costs 1% and is cheaper than a credit card by about 4%. There is no chargeback exposure. Merchants pay 2.75% through Stripe with a 2% chargeback risk on top of that. “You can make 4% margin on every product you sell Bitcoin versus credit cards,” says Singh.
Air Baltic, one of the largest airline carriers in Europe, charges a 5 euro fee on credit card purchases. With bitcoins, which the company accepts through BitPay, there is zero fee. Airlines and cell phone providers, such as new bitcoin accepting AT&T, have tight margins. Though mid-level tech brands aren’t always convinced by increased revenue and lower fees, payment managers at Microsoft and Newegg, both of which accept Bitcoin, recognize the payment value proposition. Singh doesn’t think they’re too concerned about $10 million to $20 million in new revenue.
When first considering accepting Bitcoin, big brands first want to know the legal implications of accepting Bitcoin. The legal team looks at it, and since there is nothing illegal about accepting Bitcoin payments, they sign off on it. Their next question often centers around if the payment method needs to be marketed any differently. They don’t.
“A lot of the project managers at Microsoft and AT&T, and the people doing the implementation, don’t know bitcoin and neither do most of the executives,” says Singh. “It takes longer to explain because they haven’t used bitcoin before.” Sometimes, BitPay’s educational efforts lead to individual converts. By the time BitPay went live at Avnet, for instance, a couple of the guys on the implementation team owned their own bitcoins. But, in general, big companies don’t have a lot of bitcoin champions internally.
When implementing Bitpay, big corporations assign project teams, and make a big deal of the timeline. “It’s great to watch them do it that way versus regular merchants [who] install a code and put it live,” says Singh. “They accept their timeline and dates and update calls every week, and do testing every week – it’s pretty amazing.” Eventually, it goes live.
“They just see it as a great payment option that they themselves might not use,” he says. “Then they learn why it’s better during the whole implementation process, and how supportive the community is by all the media attention they get. When big brands see Microsoft and Dish Networks go live, they take notice. It helps move brands.”
BitPay has executive meetings with Fortune 2000 companies, and their executive teams often want to learn about Bitcoin. They want to know what they can do with it. BitPay sometimes does more education in these meetings than selling, giving them background on Bitcoin, how it works, the crypto community, cryptocurrency regulation and things like that.
The Fortune 500 brands BitPay talk to generally don’t understand how bitcoin transactions work. And so BitPay talks to them over and over again. Payment managers, who are supposed to be payment experts, don’t know how Bitcoin works. “They assume they have to hold it on their balance sheet and it is too volatile,” says Singh.
When they learn they do not need to do this when using BitPay, accepting Bitcoin makes more sense. The follow-ups begin to look more like traditional sales once the educational aspect is through.
For big brands like AT&T, it comes down to the pros and cons. “It’s cheaper and quicker than a credit card,” he explains. “People all throughout America get it.”
AT&T began accepting Bitcoin through BitPay in 2019. Anything that’s in their web app and the mobile app can be paid for in bitcoin. BitPay started engaging with AT&T a year and a half ago. AT&T is actually charging that 1% fee back to the customer.
“The AT&T excitement gets all these other brands moving faster now, that really helps everything out,” says Singh.
When Avnet, a world-leading distributor of electronic components and services, began accepting bitcoin payment process BitPay in March 2019, the news made Avnet the third largest technology company in the U.S. to accept Bitcoin payments, behind Microsoft and Dell.
“If you’re in Brazil, and you need to buy $2 million IBM servers from Avnet, you send Avnet $2 million and you pay 2% FX spreads on both sides, and it takes five days,” says Singh. “We can help Avnet get paid in one day, for a 1% fee and settled in USD.”
To BitPay, that’s really the pain point that Bitcoin can solve for cross border payments. They’re cheaper and quicker than wires in most regions in the world. “CFOs hate bank wires,” said Singh. “You send a million dollars from Thailand and it comes out in America at $950,000 dollars. What happened to the $50,000? FX fees. They might not even tell you how much it’s going to be half the time or how long it’s going to take.”
While some Bitcoin purists are upset that the whole world’s not accepting bitcoin yet, Singh is convinced of BItcoin’s value position in payments and confident in the progress it has made.
“From a Fintech point of view, Bitcoin’s actually working,” says Singh. “It’s making great progress. Everyone around the world knows the name Bitcoin now and understands bitcoin a little bit. It’s got the same brand recognition as Coca Cola or IBM, Argentina, Brazil or India now, which is pretty remarkable because it happened naturally and virally. Nothing in fintech moves fast, and this is moving faster than anything we’d ever seen in fintech before. “
Singh, is not concerned Bitcoin is not yet at McDonald’s. “It doesn’t solve a pain point at McDonald’s. But, we’re slowly seeing its adoption in use cases around the world.”
BitPay employees in the US, Europe, and Latin America receive part of their salaries in Bitcoin. In Argentina, its employees take one hundred percent of the salary in bitcoin. Why?
“Not because they think bitcoin is going up,” says Singh. “Because their own currency goes down. That’s the value of Bitcoin the American’s don’t quite see. Because in America it’s just been trading or speculation. People outside and America and Europe need bitcoin. They trust it more than their own currency.
He adds: “In the US, we all trust USD, and in Europe they trust the euro. Outside of that, most people don’t trust their own currency. Bitcoin enables them as a currency hedge. If you’re in India, and you want to buy something on Microsoft’s website, your Indian credit card wouldn’t work anyway. Bitcoin enables people all over the road to be part of the global economy now and you are getting the same Bitcoin in India as in Argentina and the US, which is the same bitcoin that Microsoft accepts. It’s actually working in a full circle and brings everyone together. That’s the message people miss.”