“Losses are possible, but we didn’t estimate them”: how Tyreplus started accepting cryptocurrency payments and what difficulties it faced
Last week, the network of tire service centers Tyreplus began accepting payment for its goods and services with Bitcoin and Ethereum. In an interview with Bel.biz, Inna Samovich, the CEO of Trading Tire Company LLC, described the process of paper work for acquiring goods or services, the way of making a deal and why the company is not afraid of bitcoin’s volatility.
How the idea to accept cryptocurrencies came into being
The blockchain technology and the cryptocurrency market have been developing rapidly, and now they are trendy in the modern world. So our company, being innovative and client-oriented, always looks for new opportunities for its growth. We wanted to join the rapidly developing blockchain technology and the cryptocurrency market. We decided to start from the simplest issue: payments accepting. It’s not a secret that many Belarusians possess cryptocurrencies, but they don’t know what to do with them. After all, withdrawing money in cash is illegal so far. In addition, the commission fee for such a withdrawal may be even higher than the commission fee for the purchase of goods or services. Thus, the introduction of a new payment method is a potential growth point for the business.
Despite the fact that the blockchain technology is in demand and cryptocurrencies are of huge interest, there is a certain gap between the developers and the real business so far. There are rather few companies that can say: “We know how to integrate blockchain into your processes and solve specific problems”. Nevertheless, we found a contractor who developed a payment terminal ConPay for us. It is ConsensusLab, a company that attracts specialists having skills of working with the blockchain and develops software products using this technology. ConPay can be integrated into any business. The terminal is being updated constantly: new cryptocurrencies are added, the interface is improved for the needs of its users, the internal structure is being improved, etc.
How cryptocurrencies were selected
Now there exist about 800 cryptocurrencies in the world and new ones constantly appear. Bitcoin became the first and most famous one, but this cryptocurrency is highly volatile, and it is expensive to make micropayments because of the high cost of the transaction confirmation: the minimum is 0,002 bitcoin. Therefore, a few days after the launch of the service, we added the option to pay with Ethereum. Moreover, today many people mine it actively.
It is important to make a clarification here: bitcoin was conceived as a cryptocurrency, means of settlements in due time, while the Etherium platform was created not for cryptocurrency, but for solving problems using smart contracts. Therefore, Etherium, from the exchange rate point of view, is an even riskier cryptocurrency than bitcoin. That’s why we are ready to include other cryptocurrencies later as well (if there is a customers’ corresponding need).
How the business was prepared for shifting to cryptocurrencies
Our employees have never heard about cryptocurrencies, and the introduction of a new payment method became for them … a surprise. We had to explain what it was like and what it was for, but the interface of the payment service turned out to be quite convenient and easy, so soon our administrator cashiers could easily issue payments by cryptocurrency after the tests.
We formalized the process of sale or service as follows: the company issued an order to carry out the promo, according to which the employees have a right to give a discount to the client in the amount of 99% of the cost of the goods in case he or she wants to pay with cryptocurrency.
For example: the usual price of the goods is 100 rubles. We are ready to sell it for 1% of the cost in Belarusian rubles, and the remaining 99% will be accepted in the form of a cryptocurrency. We indicate a discount of 99% in the sales slip, which is tied to the payment in bitcoins. It is clear in the transaction that this slip refers to this payment, and this payment is connected with this slip; and the initial cost (in Belarusian rubles) is always visible. The taxable base can see 100% of the amount of the sales slip or work-order given to the client. In book-keeping, 99% of the proceeds received in cryptocurrency to be displayed as short-term assets.
How cryptocurrency volatility affects pricing
The price of tires and services is determined in Belarusian rubles. To find out how much you will have to pay for a given product or service in a cryptocurrency, we recalculate the price in Belarusian rubles at the rate of the key world’s cryptocurrency exchanges (since bitcoin is pegged to USD). It appears to be a double conversion, which takes place at the time of the service or product purchase.
In view of the high volatility of cryptocurrencies, the entrepreneurs working with them are potentially prone to bearing losses, but we didn’t count them, because we don’t expect our business to be paid out with bitcoins for 99%. We think that this will be 1% and even less, based on the company turnover.
In general, it is impossible to predict the percentage of sales in cryptocurrencies of the total turnover, since it’s unknown what volumes of cryptocurrency are possessed by the people and how much they are willing to pay with them, in contract to collecting and waiting for the moment when the exchange rate reaches its peak. Taking into account the cost of the transaction, we can assume that people can buy tires for bitcoins, but not services that are initially not very expensive. The maintenance of an expensive car will cost, for example, 500 rubles. A transaction with bitcoins can take 30–100% of the slip or work-order. This is too much. It’s easier to pay with fiat money. At the same time, a person may want to pay for large purchases with cryptocurrency, if he or she has a lot of that kind of money.
Another point is the business seasonality. The sales peak is in March-April and October-November. Therefore, it’s more logical to forecast during the hot periods. In fact, we did not have a single purchase over a week and a half of work, but there were a lot of calls about how it works. In this situation it is important for us to provide additional opportunities for our customers, work out and introduce new technologies. We try to be innovative in everything.
How to make this deal
The customer enters the website or goes in our store, chooses the necessary set of tires or service, formalizes the purchase, chooses the payment method (ConPay payment service), receives a notification that 99% of the amount should be transferred in a cryptocurrency to a specific wallet, in the form of a QR code or a number of characters. When taking the goods, the customer pays 1% in a usual way — rubles in cash or by card.
Having received the instruction with a QR code, the customer transfers money, and we receive confirmation of payment in our system. After this, we either deliver the set of tires to the customer, or he/she picks the set of tires up from one of our centers.
In order for the deal to be completed in bitcoin, the payment must be confirmed three times (this is how the system is arranged). In bitcoin, the first block closes within 5 minutes. If the customer performs a purchase in the service center, we can give the goods: we assume that the block in the blockchain will be closed. The full confirmation of the transaction takes about 30 minutes. If the customer purchases the goods online, the goods are not delivered until we see the full confirmation of the transaction (all three stages).
Problems
We had no problems with the introduction of the new payment system, but there are certain peculiarities, which have already been mentioned above: a relatively long period of payment confirmation and the transaction cost. Still, taking into account how quickly the technologies develop (lately, the block of the bitcoin peer-to-peer system should have been significantly increased), the speed of payment confirmation will increase, and transaction costs will decrease. It will be cheaper to pay with bitcoins.
What is next
Now we are waiting for “advanced” clients who are familiar with and understand cryptocurrencies. There are programmers and miners who can buy tires and services in this way profitably. So far, our country is only in the beginning of its way, and here there are some important questions. For example, what businesses should do with the cryptocurrency proceeds, as they cannot be withdrawn. Now the exchanges take place according to “gray” schemes: people agree through exchanges, publics Vkontakte and other ways, but this option is completely unacceptable for the business. Therefore, it is very much desirable the state to determine the norms of the legislation as soon as possible so as the entrepreneurs could use these tools legally.
Cryptocurrencies are now included into the payment system all over the world. The only issue is when the state will want to make money from it. Japan wanted, and the corresponding laws appeared, the state receives taxes. England wanted to receive bonuses from mining, and the government decided how much taxes must be paid, and the miners began to register companies. As soon as Belarus wants to join this trend, the relevant laws will appear.
It is worth noting that nothing will happen, if you theorize and think about this for a long time, trying to prepare an ideal law. It is necessary to resolve, have a look how it is used, what the result is, and only then correction should be made. Our moms and dads lived slowly and incrementally: first you graduate from the institute, then go to work, then wait for the keys of your apartment … But now the pace of life is different: you do it quickly, look that it doesn’t work, so change it immediately. The same rule is here. It is necessary to begin introducing blockchain to the companies, and then correct and write a “perfect” law. Moreover, the specifics of working with cryptocurrencies and blockchain depend heavily on the type of business. Perhaps, we will have 1–2% of turnover with such payments, while another business will have 50–60%.
Nevertheless, we don’t want to stop at where we are now. We are willing to introduce the blockchain into all the processes of the service center. For example, this technology allows to store all information about the car: the production date, information about all the vehicle inspections passed, the owners, breakages, replaced parts, etc. This will help improve the diagnosis and offer the right services to the customer timely.
via Bel.Biz
