Bullion Dealer Drops Credit Card Payments After Bitcoin Success
Published on August 25, 2014 at 10:42 GMT
People who knew about bitcoin prior to 2013 tend to fall into two categories: those who had the foresight to buy the currency when it was plentiful and cheap, and those wishing they could go back in time and do the same.
Like many others, entrepreneur Joseph Castillo initially passed the industry over for other interests.
Castillo first learned about bitcoin in 2009 during the digital currency’s infancy, but was initially unsure whether the concept would actually be successful. A longtime veteran of the precious metals and commodities sector, Castillo, like many people, initially thought bitcoin was silly. So, he chose instead to start a precious metals business, launching Wyoming-based Agora Commodities in 2012.
Agora Commodities found success in the industry, accepting credit cards and cash/bank transfers for gold and silver. However, following a conversation with a friend and fellow gold investor, Castillo decided to add bitcoin payments at the end of 2012 to his then-new company.
It's a decision that radically changed its future.
Between that date and the beginning of 2014, Castillo’s decision to accept bitcoin generated about $10m in revenue.
“What we had to do to protect ourselves against card fraud, we no longer have to do with bitcoin.”
This success later prompted Agora Commodities to move in a more radical direction, deciding to drop credit card payments entirely.
Castillo told CoinDesk in an interview that, on the surface, choosing bitcoin over credit cards helped reduce payment costs and the risk of card fraud, the latter of which forms a key concern for gold dealers in the digital age of commerce.
Castillo also noted the overall positive reaction by his customers, saying, “[The reaction] was generally supportive. Some customers had questions about bitcoin, but nothing negative. This business is built around trust, and once you have a customer, they’re willing to stay with you because they trust you.”
Protecting the business
Castillo said that, as a small business, the dangers of credit card acceptance, such as chargebacks and fraudulent card use – made it relatively easy to drop the payment method entirely.
“What we had to do to protect ourselves against card fraud, we no longer have to do with bitcoin – and that saves us on costs.”
Beyond the practical security advantages of shifting away from credit cards, Castillo noted another curious benefit: removing a somewhat ironic payment method. For Castillo, the purchase of gold with credit doesn’t make sense.
By comparison, he sees digital currency’s underlying technical characteristics and the intrinsic value as a worthwhile investment that makes it a payment method worth accepting.
Embracing new opportunities
Castillo cited interest among his company’s customer base – and broader enthusiasm among the precious metals community – as the driving force behind his company's move to go even a step beyond accepting bitcoin and removing credit cards.
After seeing so much success with bitcoin, Castillo said Agora Commodities now has a digital currency exchange currently in development.
While work still continues on the project, Castillo said that the company is collaborating with an existing exchange to build back-end support, with a portal expected to be integrated with Agora’s online store.
“Bitcoin fits perfectly with gold and silver, right? So if people come to the site and want to buy gold and silver, why wouldn’t they want to buy bitcoin from us as well?”
This would build on an existing service that Agora is affiliated with, Castillo said. By working with a third party, Agora will soon allow its customers to exchange precious metals for bitcoin.
Castillo added that bitcoin fits well into the broader perspective held by precious metals investors, and he foresees broader involvement from gold investors as the digital currency continues to grow in prominence.
Images via Agora Commodities
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