If they've heard of it, most casual observers think bitcoin is a passing fad, a good speculative investment, or the (distant) future of money. But most casual observers also don't know how bitcoin is really being used to innovate around old payment problems. As the leading payment processor in bitcoin today, we get a first-hand look at just that.
As the payment method of the Internet, bitcoin can go places and do things which banks and wire transfers can't. Some small and medium-sized businesses are starting to find that out, particularly in their efforts to reach international markets like China.
These countries typically have very restrictive international banking access, or none at all. Wire transfers in and out of developing countries are costly, with multiple intermediary banks taking their own cuts of the payments. These transfer costs are painful for the world's largest businesses, but they make accessing international markets particularly hard for businesses that haven't – yet – cracked the Fortune 500.
Bellatorra Skin Care is one of those companies – a Texas-based cosmetics firm that for years has provided skin-care cosmetics through the US and much of Europe. The company's full product line is available at retail exclusively through Barney's locations in the US, but the company has wholesale deals with cosmetics shops worldwide. One new target? The fast-growing Chinese cosmetics market.
Bellatorra CEO Nathan Halsey previously ran a skin-care company which operated for four years in China. They found roadblocks to growth – namely, they were only able to receive cash transactions from their clients due to cross-border currency exchange limitations.
Ultimately, Halsey's previous company had to shut down its operations in China due to these roadblocks.
When a Chinese cosmetics distributor recently approached Halsey and his current company Bellatorra about using bitcoin to pay for a wholesale shipment, the game changed. Bellatorra and the Chinese wholesaler turned to us to process the six-figure payment.
For Bellatorra and the international supplier, the payment process was simple. Bellatorra created a BitPay account and sent an email bill to the supplier. The supplier sent a bitcoin payment using their bitcoin wallet. The payment processed in minutes and settled to Bellatorra's bank account in the form of US dollars in fewer than 2 business days.
Now Bellatorra is moving to use bitcoin in more transactions, with values processed via BitPay expected to grow by 10X in the near term.
Bitcoin sidesteps many of the problems Bellatorra and other multinational businesses find when doing business in emerging markets. Designed for peer to peer transactions on a global internet, bitcoin makes it possible to send money around the world as fast as sending an email. There aren't multiple intermediaries to deduct multiple fees, and there is none of the paperwork and headache of getting yuan to dollars (or vice versa) via wire transfer.
While bitcoin is a new technology to many businesses, the BitPay platform makes it practical to start accepting bitcoin payments from your clients or resellers without any technical knowledge or integration work. BitPay receives the bitcoin payment and converts it into your own local currency. Then we deposit every dollar or euro you charge (minus only one flat 1% processing fee) to your bank account within one business day, with no risk of bitcoin price volatility or chargeback fraud for you.
For us, Bellatorra's story is not just an anomaly:
While most people are looking for bitcoin acceptance at their local coffee shop, it's in these cross-border B2B payments that bitcoin is having an outsized impact.
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