Overstock is one of the first major retailers in the US to accept cryptocurrency, and the website is receiving a significant amount of revenue through cryptocurrency payment methods.
Jonathan Johnson, a member of Overstock’s board, notably stated that he thinks cryptocurrency is a significantly better form of payment than credit cards. Currently, the majority of Overstock’s transactions are made with credit cards, which requires more resources from Overstock. Due to the significant amount of fraud and buyer protection that occurs when credit cards are used, Overstock has a team of 40 employees dedicated to their fraud department alone. These employees focus on resolving fraud complaints from customers and credit card companies and require a significant amount of financial resources to employ the 40 staff members.
Cryptocurrency removes the middle man, a bank, from the transaction, and virtually eliminates fraud. In addition to reducing fraud, cryptocurrencies are cheaper and easier to accept than credit cards. Merchant programs run by various companies and exchanges, like Coinbase’s merchant program, provide the digital infrastructure for a company to accept cryptocurrencies without charging large fees.
Johnson discussed the inexpensive and secure nature of cryptocurrencies, saying:
“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.”
Many cryptocurrency detractors claim that due to its volatile nature people are hesitant to use it as a form of payment, but Overstock’s cryptocurrency revenue negates this claim. In an address to the Heritage Foundation, a Washington D.C. based think tank, Johnson revealed that overstock has somewhere between $68,000 to $120,000 in weekly cryptocurrency revenue.
“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 in his address.
This means that Overstock can have up to $6.2 million per year in cryptocurrency revenue, a staggering number. Overstock’s underlying profit from these transactions is much higher than equivalent purchases using a credit card, due to crypto payments low processing fees.
The revealing of these numbers serves as a positive sign for cryptocurrencies as a form of payment and may inspire other large retailers to begin using them as well.
Overstock’s stock surged over 11% on the news of the cryptocurrency program’s success.