Braintree Inc.’s arrangement to allow its merchants to accept Bitcoin could significantly further a nascent trend among big merchants to take the digital money. Braintree, which PayPal Inc. acquired a year ago for $800 million, processes payments for such fast-growing merchants as house-rental service Airbnb, restaurant-reservation site OpenTable, and taxi alternative Uber.
Major merchants began climbing on the Bitcoin bandwagon earlier this year when online merchandising giant Overstock.com and department-store chain Lord & Taylor started accepting the fledgling cryptocurrency. With Braintree’s decision to enable Bitcoin acceptance, the Chicago-based company becomes one of the first major merchant processors to endorse the alternative currency.
But while Braintree will be enabling Bitcoin, apparently PayPal itself will not be taking this step any time soon. “We do believe that Bitcoin will play an important role in payments in the future and we’re actively considering ways to work with it within PayPal, but for now we have nothing to announce,” says Anuj Nayar, a senior director at PayPal, via email.
Under a deal announced Monday, Braintree merchants using the processor’s new v.zero software development kit will be able to accept Bitcoin by opening an account with Coinbase Inc., a San Francisco-based startup that processes Bitcoin transactions for merchants and also provides Bitcoin wallets for consumers. Merchants can then link their Coinbase accounts to their Braintree accounts. Transactions must be accepted from Coinbase wallets.
Merchants will be able to convert Bitcoin immediately to U.S. dollars, an important point given the cryptocurrency’s notorious volatility. It was trading at $465.26 at mid-day on Tuesday but hit a peak of nearly $1,200 in December.
Nayar says the new Bitcoin service will become available “in coming months,” though Braintree’s pricing has not yet been determined. “Braintree is planning on announcing that once we roll out Bitcoin to Braintree merchants,” Nayar says. For its part, Coinbase levies a flat fee of 1%, though it charges no fee on the merchant’s first $1 million in transactions.
Two years old in June, Coinbase claims 36,000 merchants overall. Dell, Expedia, Google, and Square are among businesses using its service. It has also issued some 1.6 million consumer wallets.
The Braintree deal is “definitely a step along the path toward legitimacy” for Bitcoin, says George Peabody, who follows digital money for Glenbrook Partners, a Menlo Park, Calif.-based consultancy. “It’s a necessary step that has to happen to turn Bitcoin from an investment [vehicle] into a legitimate currency.”
What would make an even bigger difference, Peabody says, is a decision from Braintree’s parent to support Bitcoin. “When PayPal announces, that’s another step toward utility and legitimacy,” he notes.