As Bitcoin Matures, BitPay Scales Up, Adds Zynga Gaming Payments
The new year got off to a mixed start for virtual currency, with regulators in Asia clamping down on Bitcoin and gaming company Zynga embracing the emerging payments option.
Anthony Gallippi, co-founder and CEO of BitPay, a company that provides e-commerce, business to business and enterprise services for virtual currencies, says the news is far more good than bad so much so that it's requiring additional IT work at his company.
"What we processed in November and December was two times what we did in September and October," he says, adding BitPay is now processing about 5,000 transactions per day. "We need more infrastructure."
As result, the company is expanding its bandwidth to process more transactions simultaneously. BitPay's service enables businesses to collect Bitcoin payments, which are immediately converted to cash to shield businesses from Bitcoin's market volatility and security risk.
BitPay also offers an application programming interface and "buy now" buttons and payment plug ins for e-commerce sites such as Magento, WordPress eCommerce, Woocommerce, OpenCart and Virtumart. The company recently upgraded to allow merchants to import their complete BitPay transaction history, including orders, fees and payments, into QuickBooks.
"We're focused a lot on scalability right now," Gallippi says, adding the upgrade would allow BitPay to onboard and process payments for larger merchants.
Most recently, BitPay has attracted business from gaming and luxury automakers. Zynga in early January made Bitcoin an option for users buying tokens for virtual goods on games such as FarmVille2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows and CityVille.
Zynga, which also partnered with American Express to enable payments, and BitPay did not comment on the gaming payments test.
BitPay did say it was seeing more penetration in the high end luxury market. In particular, Lamborghini Newport Beach recently sold three cars in the past month to buyers who used Bitcoin to pay for their car, Gallippi says. The California car dealership did not return requests for comment.
Bitcoin is also being used for other big-ticket purchases, Gallippi says.
"We're seeing a lot of high end luxury goods, electronic cameras and electronics, all kinds of stuff," Gallippi says, adding the availability of a mostly anonymous large transaction was attractive to buyers. "Bitcoin brings in a different kind of customer."
BitPay's model, which includes daily deposits on behalf of merchants and quick conversion to cash is designed to assuage concerns people may have about Bitcoin, fits well with a large-sized purchase, Gallippi says.
"We are not a wallet, or a Bitcoin exchange," Gallippi says. "We don't hold any significant amount of Bitcoin for any length of time. Anytime you handle Bitcoin at all there is a security risk."
The Bitcoin valuation risk is also reduced since the Bitcoin rate is set at the point of the transaction, Gallippi says.
"We take the security risk off of the merchant's shoulders. If they want to get settled every day to their bank account, there is no risk to them from holding Bitcoin," he says.
Regardless of the volatility, a number of payments experts, including SCVGNR (LevelUp) CEO Seth Priebatsch and Oink CEO Jo Webber, told PaymentsSource that Bitcoin will be major focus for the payments industry in the coming year.
"The next year will be another big year," Gallippi says, predicting Wall Street investors will become more interested in Bitcoin, mentioning Fortress' Bitcoin fund as an example.
"Wall Street will see it as a new asset class, similar to the early days of the Internet," he says.