The collapse of Mt. Gox and the steady decline of Bitcoin’s value from its December 2013 heights hasn’t put investors off the digital currency, as evidenced by Bitpay’s ability to raise $32.7 million making it the best funded Bitcoin startup in the world. The Series A funding round was led by Index Ventures with participation from Horizons Ventures, Founders Fund, Sir Richard Branson, and others.
In a statement, Bitpay said that it currently processes more than $1 million in Bitcoin transactions per day for 30,000 merchants, 50% in the US and 30% in Europe. If you buy a trip to space with Bitcoin, it’s Bitpay that will handle the payment to Virgin Galactic. Aside from looking for more clients, Bitpay is actively engaged in a number of open source projects surrounding Bitcoin that are aimed to help the business ecosystem continue to grow.
Bitpay aims to make accepting Bitcoin painless for merchants
While many of the best know Bitcoin companies (including the now defunct Mt. Gox) are Bitcoin exchanges or digital wallets, Bitpay really is a payment system. An online store that accepts Bitcoin payments through Bitpay can get paid with daily bank deposits (up to $10,000 in deposits for $30 per month, or $100,000 in deposits for $300 per month, with customized plans for enterprise clients). That means the merchant doesn’t have to worry much so much about exchange rate risk, and doesn’t have to learn to navigate the world of Bitcoin exchanges to eventually get hard currency out of the deal.
Since Bitpay is ending up with a lot of Bitcoin at the end of the day it will have to be very active on the exchanges (which creates another potential source of revenue if they bring in talented traders), but this is mostly invisible to their clients.
Bitpay promises lower fees and more security for merchants
“Bitcoin is a borderless and frictionless payment system, which is nearing a tipping-point moment in terms of merchant adoption,” said BitPay co-founder Tony Gallippi in a press release. “Unlike existing payment technologies such as credit cards, with their high fees and risk of fraud and chargebacks, Bitcoin was designed for the Internet age, offering companies a lower-cost, lower-risk alternative.”
The permanent nature of Bitcoin transactions is a double edged sword for most users, but if a merchant is simply allowing Bitpay to handle the details and getting USD in the bank every day, not allowing chargebacks really does reduce risk. Refunds can still be handled on a case-by-case basis, but customers can’t simply call their credit card provider and dispute the charge.