Bitcoin, payment processing and high-risk merchants
Danny Bradbury touches on the idea that Bitcoin could revolutionize payment processing in industries banks generally shy away from: adult services, gambling, certain travel sites, and anyone else who struggles to get a line of credit for their business.
CoinDesk’s Danny Bradbury touches on the idea that Bitcoin could revolutionize payment processing in industries banks generally shy away from: adult services, gambling, certain travel sites, and anyone else who struggles to get a line of credit for their business.
The piece leans heavily on insight from Maria Sparagis, the CEO of DirectPayNet, which helps the above such companies figure out how to get paid. Bitcoin factors in heavily these days.
Much of this has to do with the inherent benefits Bitcoin offers: Automatic approval, a lack of geographic restrictions and the currency’s irreversible payment structure.
The latter point is key in the adult services industries, particularly pornography, because buyer’s remorse influences a lot of refunds, Sparagis says.
Refunds are possible with Bitcoin payments, but they have to be done at the request of the merchant. That means someone who bought porn cannot later think, “What if this shows up on my credit card statement?” because, 1.) no chargebacks are possible, and 2.) there’s no credit card statement, anyway.
Another problem in pornography is the fact that so many sites offer $1 trials. These become testing grounds for stolen credit cards, and merchants usually have to pay more than $25 for a buyback. After a sufficient number of these with credit card processing, a new level of fines might apply, or the merchant could simply be removed.
Bitcoin has caught on with some sites already, but it faces a hurdle in not supporting recurring payments. Many pornography sites work on a subscription model.
Sparagis points out other high-risk industries, from the credit card companies’ perspective, that could benefit from Bitcoin. These include vendors of gold and silver, and storage companies (credit card companies worry about copyrights there).
The travel industry also faces a battle with traditional payment processors in that vendors and merchants sell pre-bookings, meaning they might have to honor a purchase a half year after the fact.
That could be a problem if any such company that goes bankrupt, for example. Future fulfillment is simply a high risk, she says.
Despite the benefits to those in such high-risk industries, Bitcoin needs both customers and merchants to adopt the currency before it can achieve critical mass, Bradbury writes.