How to incentivize merchants to accept bitcoin

Accepting bitcoin payments could give early adopters a competitive advantage: 10 reasons to do it.

Why accept bitcoin payments?

At the Tuscany Lightning Summit in Viareggio, Matteo Pellegrini, founder of Orange Pill App, presented the 10 reasons why a merchant should accept bitcoin in their business in the speech ‘How to incentivize merchants on-boarding?‘:

1. More freedom: since Bitcoin is a decentralized currency without intermediaries, the merchant is not tied to bank accounts or accounts with fintech companies, which have the power to close or suspend an account at their discretion;
   
2. Unlike traditional payment systems, with Bitcoin there are zero fees for those receiving a transaction. On average, debit/credit card providers apply a fee that can vary from 1% to 3.5% per each transaction. In 2022 alone, U.S. merchants paid a total of $160.70 billion to providers like Visa, Mastercard, and American Express;
   
3. The ability to pay in bitcoin could attract new customers: today there are already people who prefer to spend bitcoin or who only hold bitcoin. Additionally, the number of people who hold bitcoin increases annually, as does their purchasing power;
   
4. Better customers: according to Pellegrini, the values of honesty and transparency that emerge from the Bitcoin protocol are reflected in the behavior of bitcoiners as customers. During the speech, Pellegrini shared an episode in which a user of the Orange Pill App had paid for two memberships instead of one. Although Pellegrini wanted to refund the second payment, the user, appreciating the team’s work, refused the refund. The episode gave Pellegrini food for thought. During the speech, the founder of Orange Pill App stated: ‘A customer on Bitcoin Standard is worth more than one on the Fiat Standard.‘;
   
5. Financial privacy: if used correctly and with the right precautions, Bitcoin can prove to be a tool capable of protecting user privacy. Merchant and customer can collaborate in a PayJoin transaction to disrupt the common input ownership heuristics used by blockchain surveillance companies like Chainalysis;
   
6. Instant settlements: to make or receive a bank transfer, 2/3 working days are needed. If you carry out international transactions a week or more may be needed. In contrast, Bitcoin offers the possibility to send and receive transactions with instant settlement: when making on-chain transactions, one needs to wait 10 minutes or more depending on the network congestion, while thanks to the Lightning Network, the second layer of Bitcoin, it is possible to receive and send instant payments with immediate confirmation;
   
7. Financial sovereignty: if one opts for the use of a non-custodial wallet, the funds belong to the merchant as long as the private keys remain under his control; Bitcoin is an asset that cannot be seized, unlike a bank account;
   
8. Bitcoin is an NGU (Number Go Up) technology: since the supply is limited, the price of bitcoin depends only on market demand; in its 15 years of existence Bitcoin has proven to be the best asset in the history of mankind;
   
9. Free publicity: being one of the first commercial activities to accept payments in bitcoin in your city can attract the attention of the most curious and passionate; such a move could offer a competitive advantage over your competitors (First Mover Advantage);
   
10. No possibility of chargebacks: a chargeback is the refund of money to the customer after the cancellation of an online purchase of a good or service. The reversal of the charge cancels the transfer of money from the consumer’s bank account or credit card. In 2023, chargebacks cost merchants $117.46 billion. Thanks to LN which offers instant payment confirmation, Bitcoin eliminates the possibility of chargebacks.