Many of the Bitcoin stories so far have focused on its rollercoaster pricing and its melodramatic exchanges. But at least one Bitcoin startup is getting down to business — and it has just scored $30 million to continue doing so.
The Atlanta-based BitPay provides business solutions for merchants who want to accept Bitcoin — integration with shopping carts, billing systems, points-of-sale, and settling Bitcoin payment in U.S. dollars and other traditional currency.
Why would a merchant want to accept such a tumultuous financial instrument?
“Bitcoin does not experience any payment fraud,” cofounder and CEO Stephen Pair told VentureBeat. “Credit cards expose [merchants] to risk and fraud,” he said, adding that about 2 percent of credit card transactions are fraudulent, such as when a crook uses a stolen credit card number.
“And because of the lower incidence of payment fraud, we can charge much less in fees.”
BitPay said that its processing fees can be as low as 1 percent and that it has no setup charges.
The company said it processes $1 million in Bitcoin payments daily from more than 30,000 merchants, including WordPress, TigerDirect, and Shopify. Half of the merchants are in the U.S., a third are in Europe, and the rest elsewhere.
Virgin Galactic uses BitPay to accept reservations for future space flight in Bitcoin, an appropriate matching of 21st century currency and travel. Virgin founder Richard Branson is an investor.
Pair pointed out that BitPay hasn’t had to deal with the turmoil of the Bitcoin exchanges, since it is focused entirely on the B2B market. The hard-to-trace Bitcoin has also been a currency of choice for some underground enterprises, but Pair said the merchants in BitPay’s network are all vetted.
In fact, he said, Bitcoin is most appropriate for the business market, not only because of the lack of fraud but because it is useful for international transactions. Pair pointed out that email similarly found its legs first among businesses.
This Series A funding round, which Index Ventures led, comes on top of $2.7 million previously raised. BitPay said that it has raised more venture funding than any other Bitcoin-related startup. Although not direct matches, competitors include CoinBase, GoCoin and, in Denmark, Bips.
Pair said the money will be used to add about five dozen employees, mainly software developers, to its teams in Atlanta, San Francisco, Buenos Aires, and Amsterdam.