You can buy many things using Bitcoin. The digital cryptocurrency has made headlines for its links to the deep dark web, notably the online black market Silk Road where unsavoury items such as drugs and child pornography could be traded until it was shut down. Look no further than your local ecommerce domain, and you’ll see that the popularity and dedication truly stretches across borders like it’s born to. Why should local companies from emerging markets think about implementing this controversial cryptocurrency into their businesses?
No ad to show here.
Based in Johannesburg, South Africa, there’s Gold Rhino — an online store where you’ll find ostrich skin smartphone cases, springbok skin iPad covers, crocodile leather travel bags and other local “luxury products”. Apart from various eccentric pelts, the online African game trophy store also features traditionally beaded Bitcoin keychains to better showcase its support for the currency’s cause, in a uniquely African spirit.
Whether it’s a decisive business move or an enthusiastic Bitcoin miner’s afterthought, there are various reasons a company like Gold Rhino would support the Bitcoin industry. For one, such a move simply shows it’s keeping up with the trends, or naturally broadening its horizons.
On the surface of things, companies might want to target a specific demographic, namely the tech-savvy, by adopting the extremely hyped currency. The Bitcoin community is popularly known to support others who further its cause so adopting the cryptocurrency as an alternative form of payment might add to its online visibility. Companies that join the scene are literally placed on a map and we’ve seen international familiars such as casual games developer Zynga and online gift card company Gyft welcome this alternative payment option to better define, or tap into, their niche audiences.
More practically, however, one of the main reasons why trading in Bitcoin could be beneficial for South African businesses is that there’s a lot of low-hanging fruit in terms of the marginal savings that could be made in contrast to having a fiat currency back-end explains local Bitcoin enthusiast and MIH Media Lab researcher, Frederick Lutz.
Lutz explains that while Bitcoin transactions could easily fall under the tax evasion category, it’s not necessarily the case. By simply skipping over the middlemen, companies can benefit from Bitcoin’s secure transactions and minimal, if any, payable transaction fees.
Local cryptocurrency developer and Bitcoin aficionado, Simon de la Rouviere elaborates on why Bitcoin is a preferred, alternative method of transaction for businesses in South Africa and other markets. “Primarily, I think Bitcoin is a lucrative additional payment method because of lower fees, no credit card fraud and chargeback risks, and that payments are natively mobile,” he says to Ventureburn.
Both businesses and customers can furthermore steer clear of currency fluctuations when it comes to international or inter-bank transactions and transfers, making the process more cost-effective and less of a chore.
The exceptional mobile adoption rate in Africa has been something of a popular topic. It’s also an industry where local businesses and people can potentially cash in on. De la Rouviere explains that merchants can “very quickly set up a Bitcoin POS system.” Businesses can even do so using certain feature phones. In theory, making a purchase is as easy and seamless as snapping a picture of a QR code with your device at the register.
So which South African ecommerce sites are using it?
Like Gold Rhino, Luxury African safari company Ashworth Africa, a few months ago, announced it’s including Bitcoin as a method of payment on its site. In the announcement the company explains this move:
“Our clients live around the world, and payment by Bitcoin will allow them to avoid the hassles and high charges related to credit card payments and bank transfers. We love the fact that using Bitcoins is extremely easy, fast, secure and inexpensive, and hope that decreased currency volatility and increased acceptance by merchants in 2014 will result in many more people becoming increasingly comfortable using Bitcoins.”
Based in Cape Town, Silver Banana is a company that offers printing solutions for everything from pillow cases, custom t-shirts, frosted glass and signage to stickers and business cards. Other South African ecommerce sites include computer hardware store Landmark PC, hair and beauty product store Salon Supply Store and a handful of others.
The intentions and benefits of using Bitcoin are great, though experiences about its uptake vary on the business type and the implementation.
After deciding to experiment with this exciting currency, South Africa Travel Online started accepting Bitcoins for its popular Durban to Cape Town cruise. Despite its intentions, “There was not one little bit of interest from anybody to purchase a cruise in Bitcoins,” says company CEO Rob Baker. Though the tiny local Bitcoin community was “upbeat” about this move, after the company sent out an invitation to its 55,000 newsletter community, there simply was no interest. Whether the lack of uptake was due to a limited community, the type of product or both, we don’t know.
This, to Baker, shows that the Bitcoin industry in South Africa is still in its infancy and, all its technical benefits aside, is not as attractive as more common fiat currencies. The fact that it’s in an experimental phase does, however, mean that it carries as much potential and that is exciting.
Given its nature of being a global currency, physical goods seem to be a less popular commodity in the Bitcoin community while web products are gaining more traction. Salon Supply Store is part of the GearTribe Group which consists of 27 web properties. It implemented Bitcoin transactions when BitPay, which is basically like a PayPal for Bitcoins, had reached a point of maturity and it allowed for Rand disbursements. CEO Riccardo Spagni shares his experience so far:
“We deployed it to Salon Supply Store in April, 2013, and to our export-oriented web properties in July, 2013. The local responsive has been uneventful, a handful of purchases in nearly a year, so we won’t be rolling it out to the rest of our locally focused web properties at this juncture.”
It’s not all that bleak, however, reassures Spagni. “Our export-oriented web properties have been pumping — we’re averaging 3% of our transactions in Bitcoin across them.”
Bitcoin gives businesses a chance of accessing global markets better. Merchants can easily expand to new markets where either credit cards are not available or fraud rates are unacceptably high. As also pointed out by Lutz:
“People are able to set up an entire startup in South Africa with the same price it would cost for a single developer from the US. With Bitcoin being a global currency by definition, it’s easier to gain access to new markets with less expensive, high quality products.”
Update: Since the time of publication, many other SA ecommerce stores accepting Bitcoin as payment have come forward including interior decorating site SMACS, Appliances Online, electronic cigarette store Vapes and, the more recent, CableKiosk which sells electronic accessories.
Image via Alistair
