- Stripe, the $AU11.25 billion online payments company, is putting an end to the product that enabled retailers to accept bitcoin as payment.
- It’s a major hit to the popular cryptocurrency, once believed to be the future of online payments, but Stripe isn’t the only company to back off.
- Expensive transaction fees and long wait times have made it difficult to use bitcoin for small transactions, since mining fees spiked at $A47 per purchase in December.
Citing a decrease in use by both retailers and customers, Stripe said will wind down support for its bitcoin payment application and stop processing bitcoin payments entirely on April 23.
“Empirically, there are fewer and fewer use cases for which accepting or paying with Bitcoin makes sense,” Stripe product manager Tom Karlo wrote in the announcement.
While the explosive growth of bitcoin – with prices shooting as high as $A18,753 earlier this month, before sinking down around $A13,752 at the time of writing – drove mass interest in the cryptocurrency as an asset for investment, it also brought to the surface concerns about its use for everyday payments on a large scale.
Mining fees – the cost paid to the people who provide the computing infrastructure behind each bitcoin transaction – peaked in late December, when people were required to pay $A46.26 on top of any transaction just to make sure their payment went through in a timely manner. Transactions submitted without a high-end mining fee could take hours or days to process, at which point the value of bitcoin in USD likely had changed.
Today, mining fees cost just over $A7.50 per transaction, but that number is volatile and spikes when more people are making transactions. In addition, there can be other fees associated with paying in bitcoin – services like Stripe charge per transaction, for instance, which can drive the overall cost of a bitcoin transaction even higher.
Stripe – which makes much of its revenues on credit card transactions – is not the first company to back out of what has become a very expensive and time consuming means of exchanging money.
The online video game storefront Valve stopped accepting bitcoins in December, and Microsoft briefly disabled bitcoin payments around the same time. Both companies handled bitcoin payments through BitPay, a bitcoin-specific payment application and Stripe competitor, which itself temporarily banned payments under $A125 because of the large fees associated with transaction.
While Karlo wrote in the blog that Stripe remains “very optimistic about cryptocurrencies overall,” the end of its bitcoin product marks a big shift in both the payments industry and bitcoin more broadly.
When Stripe first enabled bitcoin payment process in 2014, advocates for the cryptocurrency believed that it could be a cheaper than credit cards like Visa, which charge seller-side customers a fee on top of each transaction, and more accessible to people in part of the world without banks or stable currencies.
“Our hope was that Bitcoin could become a universal, decentralized substrate for online transactions and help our customers enable buyers in places that had less credit card penetration or use cases where credit card fees were prohibitive,” Karlo wrote in the blog entry.
That hope, it turns out, was misplaced.