Despite media hype around the future of Bitcoin and high-profile mobile payments providers such as Square and Stripe preparing to accept the virtual currency this year, new research warns of consumer distrust of the virtual currency.
The study, from Venda, indicates that the future success of Bitcoin on UK shores looks uncertain, with 71% of consumers reporting that they would not like to have the option to pay using the virtual currency.
In contrast, a recent report found that global transactions of Bitcoin have increased over 10 fold over the last year1 to an average $68m per day in February 2014, making the virtual currency a hard trend to ignore for some businesses.
The main concern for 43% of consumers was that they did not trust the virtual currency, although the same number also admitted that they don’t fully understand how the currency works, which could explain the distrust.
This lack of understanding around how new virtual currencies (such as Auroracoin, Litecoin and Peercoin) work was particularly felt among women, with almost half (49%) saying they were unfamiliar, compared to 36% of men. In addition, almost a quarter (24%) of those that didn’t want to use Bitcoin reported that they were concerned that the currency is unstable, potentially meaning that they would worry about possibly paying more for items compared with other payment methods.
In contrast, the main reason UK consumers would like to have Bitcoin available while shopping online was simply that it is a valid currency, therefore should be available (8%). The anonymity that Bitcoin offers appealed to 6% of those polled, who like the fact they can make purchases without having to reveal their identity. Consumers were also willing to use Bitcoin if retailers were to offer discounts for use of the new virtual currency (5%) or if it meant they no longer had to carry cash (5%).
Eric Abensur, Group CEO, Venda stated, “The prospect of new crypto-currencies, such as Bitcoin, adds a new meaning to ‘alternative’ ways for consumers to pay for their goods, whether online or in-store. Much has been said about these new currencies over the last 12 months, but their growth in media speculation makes them a difficult trend to ignore. However, our research warns of a fundamental mistrust of Bitcoin and need for more education on how these virtual currencies actually work if they are to truly take off. A time may come where consumers can pay in-store using Bitcoin, but for now the fact that the price of a Bitcoin is in constant flux means that it’s simply not a viable way for businesses to take money for products. Even those that are currently taking payment by Bitcoin for products or services are, by and large, converting that to a standard currency for safe keeping and further use.”
Payment turn-ons and turn-offs
The research from Venda, who commissioned YouGov to poll the views of a representative sample of 2,052 UK adults online, also finds that consumers may actually be more likely to make a purchase online if a retailer was to offer an ability to pay once the items were delivered (19%) or reserve an item and pay for it in instalments (13%). The latter is something that would make almost one in five (19%) Welsh consumers more likely to make an online purchase, as well as 17% of people based in Scotland and the North West.
Before adding Bitcoin or new payments options, however, it’s important that retailers make sure they have existing popular ways to pay available through their eCommerce site or risk consumers abandoning their purchase altogether. For example, Venda’s survey reveals that one in five (20%) UK shoppers said that they have abandoned an online purchase for an item that they wanted because the site did not allow them to pay using PayPal. In addition, 11% of those questioned said they have given up on a purchase because their preferred payment option was not supported, for example American Express or payment by instalments (a payment option commonly offered in the US, but not yet seen in the UK).
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,052 adults. Fieldwork was undertaken between 26th-27th February 2014. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).