Jonathan Johnson, a member of the board of directors of Overstock, the $1 billion online retailer based in the US, has stated that cryptocurrency is a much better payment method than credit cards for merchants.
Due to buyer protection and the centralized aspect of credit card networks, it is possible for buyers to request refunds and cancellation of payments through third party service providers. Unforeseen payment errors can create legal problems and complicated issues that need to be addressed by both the company and the credit card network operator.
Consequently, Johnson revealed that Overstock has 40 employees in its fraud department alone, whose main task is to oversee credit card payments and resolve any potential issue that may occur on either the buyer’s side or the credit card network’s part.
Johnson further emphasized that for Overstock, accepting cryptocurrencies like Bitcoin and Ethereum is significantly easier and cheaper than accepting credit card payments because of the API of major cryptocurrency exchanges and brokerages like Coinbase that enable merchants, even large-scale conglomerates, to accept cryptocurrency payments without establishing a secure and expensive infrastructure.
“We pay a processing fee for credit cards, and we employ about 40 people in our fraud department. That’s a cost of doing business with credit cards. When we take cryptocurrency, we have a very small transaction fee with Coinbase, much smaller than our credit card processing fee, and we have no fraud prevention department. It’s like a cash transaction. For us, that is a much cheaper way of doing business,” said Johnson.
Overstock Does Have Large Cryptocurrency Revenues
Throughout 2018, many multi-billion dollar companies like Twitter CEO Jack Dorsey’s Square and Revolut have integrated Bitcoin and other major cryptocurrencies. But, investors expressed their skepticism towards the integration of cryptocurrencies by these leading platforms and the relevance of it in terms of its percentage over the total revenues of these companies.
Overstock is among the earliest retailers to accept cryptocurrency payments.
In an address to the Heritage Foundation, a think tank in Washington, D.C., Johnson revealed that Overstock has between $68,000 to $120,000 in weekly cryptocurrency revenues. Its weekly revenues from cryptocurrencies likely vary every week due to the volatility of the market and the tendency of digital assets to increase and decline in value by large margins in the short-term.
“We have somewhere between $68,000 and $120,000 a week in cryptocurrency revenues; people buying sheets and toasters using bitcoin or ethereum or other coins,” Johnson said.
As the president of Medici Ventures, a cryptocurrency investment arm of Overstock, Johnson added that the majority of retail investors struggle in participating in the capital markets and strictly regulated sectors and as such, most opportunities are only available to accredited investors.
But, Johnson noted that the cryptocurrency market has changed the way retail investors can participate in investing, with full transparency and liquidity.
“Today, so many of us can’t participate in the capital markets the way accredited investors or well-connected investors can. And those of us that are trying to raise money have a hard time crowdfunding or raising money in a democratized way.”
The optimistic development in Overstock’s cryptocurrency ventures led the shares of Overstock to surge by more than 11 percent.