Yet another company has decided it's itching to take your bitcoins. Expedia, the travel-booking company based in Bellvue, Wash., says that customers will now be able to spend their hard-earned cryptocurrency on hotel stays.
Expedia's foray into virtual currencies follows an uptick in customer requests for Bitcoin support, according to Michael Gulmann, the company's vice president of global product.
"It came down to the right timing — both for Bitcoin as a currency, and for Expedia in our lifecycle," said Gulmann in an interview.
The dead-simple process will probably help drive Bitcoin even further into the mainstream, even as it's enjoyed a tumultuous year in the public eye. Expedia isn't the only major company to start supporting virtual currencies of late; last month, the satellite TV giant Dish Network said it was doing the same.
It's unclear how many people will actually wind up taking advantage of the Bitcoin payment method. Not even Expedia is entirely sure.
"I'd be lying if I said I had a good prediction for you," said Gulmann. "The minute I give you any number, I know I'm going to be wrong."
The uncertainty speaks to a larger problem with Bitcoin: People are so convinced that they'll make more money holding onto it as an investment that they are reluctant to spend it. But Expedia doesn't suddenly need to derive half its revenues from Bitcoin overnight to make this move a success. Here's why.
Adopting support for bitcoin transactions is relatively straightforward. Both Expedia and Dish Network have contracted with Coinbase, one of the top payment processors in the virtual currency universe. When a user commits to a hotel reservation and wants to pay, Expedia will hand the user off to Coinbase's Web site, where the customer will log into her personal bitcoin wallet and authorize the transaction. (This should sound familiar to anyone who's used PayPal to buy goods and services online.) Coinbase then automatically converts the bitcoins into dollars and boom, the payment is complete.
Expedia was able to execute on this idea in a matter of months, according to Gulmann, who added that the costs of implementation were "not that big."
That's great for Expedia, but if it cost practically nothing and they're not sure how popular the option will be, how is it any different from a simple gimmick? Here's a selling point for our service that you may never use, but ignore that because we're cool — really!
To understand why this isn't a gimmick and it actually makes sense for all kinds of businesses, we have to talk about fees. Over the long run, Expedia, Dish and other companies stand to save a lot of money by taking payments in Bitcoin. That's because the transaction fees levied by credit card companies on merchants are in some cases more than double what a comparable bitcoin processer might charge. For example, Visa charges merchants as much as 2.95 percent per transaction. Coinbase charges just 1 percent — and the fees kick in only after a merchant has done more than $1 million per month in business.
Expedia obviously makes far more than that every year. In 2013, it pulled in over $4 billion in revenue. But if it can pay a little bit less to the credit card companies on even a fraction of that business, it'll come out ahead.
Yes, being among the first to accept bitcoins comes with bragging rights. For Expedia and other firms, though, convincing people to pay with Bitcoin is just good business.