Tea Merchant Builds Coinbase Alternative for Litecoin Processing
Published on February 5, 2014 at 19:00 BST
When online farm-direct tea marketplace Tealet first contemplated accepting bitcoin, it did so because it perceived there would be an overlap between its customer base and the emerging virtual currency users.
As CEO Elyse Petersen told CoinDesk this October, both the company and bitcoin users are dedicated to “trying to cut out the middlemen”.
However, Petersen had no idea just how enthusiastic the response would be. In the months since, Tealet has relocated from Hawaii to a new home in Las Vegas. There, it’s found itself taking on a role as an ambassador for the cryptocurrency community, both to interested customers as well as other tech startups that want to replicate its success.
Since its 17th September launch, Tealet has seen 45% of its total revenue come from its bitcoin customers, who purchase from its extensive catalogue of loose leaf teas or subscribe to its bi-monthly tea delivery service.
Inspired by these strong sales figures, Petersen and Tealet web developer Cody Moniz began to consider the benefits of adding other virtual currencies, finally selecting litecoin as the payment option that could give its bottom line a boost.
But, after conducting some market research, Petersen came to an important realization, one that would lead her team to go above and beyond what many merchants would hope to achieve:
“A service like Coinbase is not available for Litecoin, so we had to build our own,” Petersen said.
Despite her success with bitcoin, Petersen may not have moved so quickly on litecoin if it hadn’t been for her friend and fellow MBA student Warren Togami, a lead developer for litecoin who conducts interviews with Charlie Lee, and the passion of Tealet developer Moniz.
Petersen said that though Warren did suggest that she pursue litecoin, she was ultimately swayed by the virtual currency’s unique approach to market adoption.
“We found it interesting that the marketing angle is not to bash bitcoin, but to try and build their brand around bitcoin and encourage bitcoin users just as much as they do litecoin users,” Petersen said.
While enthusiastic about the possibility, Petersen was further dismayed by a lack of options that could provide the “smooth and low-risk transition” from litecoin to USD Tealet required.
“We looked around at all the different options, but there was no main processor out there. The merchants that did have something, it was more of a manual process. When you would go through the shopping cart, they would just give you a litecoin address, and they would manually manage the orders as they came in,” said Petersen.
Such a system, while useful to some merchants, simply wasn’t practical for Tealet, which can process upwards of 100 orders a day.
Developing a solution
The completed project was the result of two weeks of effort by Moniz, who Petersen described as a “cryptocurrency fanatic” who was happy to put his skills to the test with a big challenge. Warren, in turn, conducted quality control to ensure the project was ready for its launch.
As of 5th February, Tealet shoppers can now add teas to checkout, and before completing the purchase, choose whether to pay with a debit or credit card, bitcoin or litecoin.
Next, a window will appear displaying a QR code along with the amount the customer owes in LTC. Prices will be valid for a 30-minute window. Once customers complete their purchase, Tealet’s new system processes the order.
To mark the launch, Tealet buyers will also be able to purchase special litecoin tea boxes, which also come with free litecoin keychains.
A white-label solution
For now, the processor is a work in progress. Petersen said that Tealet still needs to manually move its litecoin earnings from a BTC to USD state. But, she’s optimistic such kinks will be ironed out.
“Theres a little bit of exchange risk we’re taking on, but we’re just so enthusiastic about accepting litecoin that we’re willing to take on that risk now,” Petersen explains.
Petersen hopes Tealet will soon be able to offer its processor as a white-label solution, though she acknowledges more advanced solutions from competitors could make it obsolete with time. This version of the processor would utilize watch-only wallets to help other merchants accept LTC without worrying about money service business or money transmitter requirements.
The CEO mentioned that she has since learned about market alternatives like GoCoin, which now offer litecoin processing, and is considering making the switch to this service.
“It’s kind of funny, it’s like ‘You’re a payment processing company?’ ‘How did that happen?’” Petersen remarked.
Still, her story is proof that despite the rise in popularity of bitcoin and litecoin, market solutions are still limited, and that opportunity abounds for enterprising firms.
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