Retail acceptance of Bitcoin is low and getting lower

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An image of Bitcoin and US currencies is displayed on a screen as delegates listen to a panel of speakers during the Interpol World Congress in Singapore on July 4, 2017. Photo: AFP

Published: 5:00am, 13 Jul 2017Updated: 5:04am, 13 Jul 2017

Retailers were already sceptical about letting customers pay with bitcoin before the cryptocurrency’s price underwent an astronomical rally this year. That rapid surge hasn’t made them any more accepting. In fact, it may have done the opposite.

Bitcoin is accepted at just three of the top 500 online merchants tracked by the e-commerce news and analytics publication Internet Retailer, down from five last year, Morgan Stanley payments analyst James Faucette wrote on Wednesday in a report, highlighting the “striking” discrepancy between virtually no merchant acceptance and bitcoin’s recent gains.

“Bitcoin owners are reluctant to use the cryptocurrency given its rate of appreciation, more evidence that bitcoin is more asset than currency,” Faucette said. “Way easier to trade speculatively than convince new merchants to accept the cryptocurrency.”

This picture taken on April 7, 2017 shows a man walking past a signboard informing customers that Bitcoin can be used for payment at a store in Tokyo. Photo: AFP

The hesitance among retailers may also be linked to bitcoin’s scaling challenges, as transactions become slower and more costly, he added. The consumer, rather than the retailer, bears that cost, which can vary depending on how the transaction in conducted.

Internet Retailer’s 2017 top 500 list, which is based on online sales, is led by Amazon.com, Apple and Wal-Mart Stores. Morgan Stanley, which based its usage analysis on the information, didn’t say which companies are using bitcoin.