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A payment service provider that helps businesses accept Bitcoin in online shopping carts and retail stores announced on Monday that its client-base of merchants has increased ten-fold in the last year.
According to Atlanta-based Bitpay, more than 10,000 merchants around the world are now using its processing services to accept payment in the virtual currency, with Bitcoin proving especially popular with companies that sell consumer electronics, IT services and precious metals.
Bitpay, which is backed by venture capitalists tied to PayPal, touts Bitcoin as a way for merchants to accept online payment at lower cost and risk than credit cards. The company, which has so far processed $34 million in Bitcoin payments in 2013, charges the merchants a 1 percent service fee to handle the transactions.
The rapid growth — from 1,000 to 10,000 clients in a year — appears to be a promising sign for both Bitpay and virtual currencies in general. But, like so many things associated with Bitcoin, it’s too soon to say if the growth is real or illusory.
To get a better idea, I spoke to Bitpay CEO Tony Gallippi last week, and asked him how many of his merchants were actually collecting Bitcoin on a regular basis.
Gallippi estimated that one-third to half of the merchants using Bitpay had a transaction in the last month, and that “a couple hundred” are doing more than five transactions a day. He says frequent users include publishing platform WordPress and Gyft, a site that lets users swap online gift cards.
These details reflect how Bitcoin is still far from becoming a mainstream currency. But, as Gallippi notes:
“We’re still early in the adopter cycle.. only three to four million people around the world have Bitcoins.”
Bitcoin’s future growth may depend on intermediaries like Bitpay. While one of the virtual currency’s prime benefits is that it peer-to-peer, and doesn’t require middle-men, it is still too esoteric for average consumers and merchants to grasp; that’s why companies like Bitpay and Coinbase, which offers a newbie-friendly wallet and exchange service, have been able to carve out a place in the noisy Bitcoin eco-system.
In other Bitcoin news, Armory Technologies on Monday announced that it has raised $600,000 to build a more secure wallet for the currency.