Bitnet Technologies Exits Stealth Mode, Launches at CNP Expo
May 19, 2014
Bitnet Technologies , a San Francisco Bay Area-based company enabling merchants to accept bitcoin and other digital currencies, officially launched today and has chosen the CNP Expo for its coming out party. Bitnet, conceived and founded by former employees of CyberSource and Visa, is leading a new wave of companies entering the digital currency space with the payments expertise to make bitcoin transactions work. CEO John McDonnell, one of the Visa vets, says Bitnet is part of a new phase of “seasoned, well-financed operators that have entered the market” who will shepherd the industry past recent challenges and toward its true promise—low cost online transactions anywhere in the world.
“We see the Bitcoin protocol as having turned a public Internet into a secure payments network and that’s compelling,” says McDonnell. “It eliminates a lot of costs and a lot of intermediaries in transactions. Our collective presumption is the cost savings will create huge motivation for merchants, and ultimately consumers, to adopt bitcoin as a currency.”
Merchants and businesses worldwide can now accept bitcoin for their goods, services or charity endeavors and be paid out directly in local currency. McDonnell says the Bitnet solution eliminates many of the costs and risks inherent in accepting card-based solutions offered by the incumbent payment networks. Using Bitnet also simplifies transactions with global customers, as there is no longer the need to broker and sign payment processing deals on a country-by-country basis.
The Bitnet gateway allows merchants to process payments with significantly lower costs (less than 1 percent per transaction vs. 2-9 percent with cross-border fees) and none of the risks of traditional credit cards.
In fact, he notes, given the effect bitcoin has on chargebacks and fraud, the benefits of accepting the digital currency are tilted heavily in favor of merchants. And, they will have to lead the way on consumer adoption.
“As we all know, there are hundreds of millions—maybe over a billion—dollars a year in fraud we’re all eating, including consumers,” McDonnell says. “Fraud is a massive drain on commerce. With bitcoin, merchants could even prime the pump with discounts and promotions to create awareness and motivate consumers to use this new payment method, and still come out on top.”
And, McDonnell says, Bitnet intends to be the solution that enables them “in a seamless way to put a ‘bitcoin accepted here’ button on their checkout page and be 100 percent confident that payment will be managed and the receipt of those funds guaranteed.”
McDonnell points to popular retailer Overstock.com as an example of other benefits. The site began accepting bitcoin in January of 2014 and topped $1 million in sales via the currency in the first two months. And, while the overall numbers of bitcoin users on the site is relatively low, those that do use it spend 34 percent more than credit-card users.
Because Bitnet has offices in San Francisco and Belfast, it will focus initially on customers in North America and Europe. Eventually, however, the company’s leadership envisions a global company bringing bitcoin acceptance to merchants in emerging economies that will use it as a leapfrog technology, where consumers will be driving adoption every bit as much as merchants.
“The story there is one of consumers being as open and eager to use bitcoin as merchants will be to accept it, simply because banks haven’t fulfilled demand by the rising middle class in those emerging economies for purchasing goods and services online.”
Noises from the Chinese government notwithstanding, Bitnet sees a “huge” opportunity in Asia. And, in Africa, the company is already in “active discussions” with a partner that would enable consumers to load what amounts to a bitcoin wallet at physical locations.
Regardless of where it happens, McDonnell says Bitnet is filling a vacuum in the market that will simplify payments for large merchants in a way that was never possible before digital currencies.
“A big part of our excitement to hitch our wagon to the bitcoin train is the fact we’ve spent years building payment platforms, and we understand the actual payment transaction is just one component of managing the e-commerce experience,” he says. “In bitcoin, the protocol has been designed for a sender and receiver to complete a transaction without anyone but the public Internet between them. That simple scenario doesn’t exist at the enterprise level e-commerce market.”
For CNP Expo attendees, to speak with someone directly about Bitnet, please visit Booth 400 on the Exhibition Floor. Also, CEO John McDonnell will be part of the “Card Not Needed” panel on Tuesday at 2:15 p.m. On Wednesday at 3 p.m. you can join McDonnell and Bitnet CTO Stephen Mc Namara at their Exhibit Hall Demo, “Taking Care of Bit’ness.” For more information on Bitnet, visit www2.bitnet.io/cnp.