The acceptance dilemma of bitcoin and mobile payments
Bitcoin was a giant digital “take that” to the government and big financial institutions. Its founders basically said, “We don’t need your centralized control; we can create a truly free currency.” Bitcoin was the digital representative of libertarianism as it was built to encourage a free market without meddlesome government control. Many bitcoin evangelists believed it would one day overtake fiat currency. That dream, however, is still far from becoming a reality because bitcoin still has the same problem as mobile wallets – not enough people use them.
Mobile payments have struggled to reach mass acceptance, according to an article on Mobile Payments Today. This seems odd since the necessary technologies of near-field-communication, tokenization and authentication are all falling into place. Mobile payments has the “how” down, but it hasn’t captured the “why.” Why should customers use mobile payments? Bitcoin suffers from this same issue.
Most consumers don’t see any problems with their preferred forms of payment: cash and plastic. Common sense dictates, “If it isn’t broken, don’t fix it.” Why would customers turn to alternative payment methods such as bitcoin or mobile payments, when they don’t see a problem with their cash or cards? Unless everyone becomes a libertarian, bitcoin isn’t going to see mainstream acceptance at this rate.
Bitcoin needs a “why” to have a path forward to mainstream acceptance. Retailers and bitcoin companies both have a role to play in providing this reason to the customer.
If retailers want customers to use a new tool, they need to provide incentives. They could give customers, for example, additional loyalty points for using a bitcoin or mobile wallet. They could also offer discounts for bitcoin users. When customers realize they can save money by using virtual currency, adoption rates will go up.
Bitcoin Loyalty is one example of a loyalty program that tracks bitcoin addresses and rewards loyalty points to repeat customers.
Bitcoin is a difficult tool for average users.
“It has so far developed in a way that is too complex for (the) average person. If you talk to people in your life, you are going to get blank stares if you mention bitcoin,” Gene Kavner, CEO of iPayYou said in a story.
In order to draw in customers, you need to develop easier ways to use bitcoin. Bitcoin ATMs and vouchers can help solve this dilemma by supplying easier methods to purchase bitcoins. The company iPayYou is addressing this issue by allowing users to send bitcoins via Twitter.
Recognize bitcoin’s benefits and limitations
Bitcoin is by nature a volatile currency, which makes it very valuable to investors but less tenable as a regular currency. The volatile nature of bitcoin can also make it a key incentive.
An online retailer, for example, could partner with a bitcoin company to offer small amounts of bitcoin as a reward for loyalty program customers. Online retailers could create more loyal customers by using bitcoin as an incentive rather than other retailers who simply offer loyalty points. The online retailer could keep the rewarded bitcoins in a company owned bitcoin wallet that the user could use for purchases. Businesses could also emphasize the secure nature of bitcoin for customers who are worried about providing credit card information.
Bitcoin is not the ultimate currency, but with the right tools and incentives, it can gain a lot more love from the mainstream.