edit: since MtGox only charges a fixed %age fee for transactions, automating a conversion into USD wouldn't cost any more than doing periodic larger transactions (other than the development and maintenance cost of such a system
People in the Bitcoin community believe that these options are mutually exclusive, but they're not. If you're doing a dual currency transaction in a period of high volatility, somebody is paying for that exchange risk. It's either the customer, the payment processor, or the merchant, or possibly two of them, but it certainly isn't no-one.
There were multiple periods today in which Bitcoin fell more than 10% in 15 minutes. If I were insane enough to sell Bingo Card Creator for Bitcoin, and then gave an elementary schoolteacher a quote for 0.42785714285714285714285714285714 BTC ($29.95 at 70 to the dollar), it's entirely possible that in the five minutes of thinking it took to process everything on the screen, the 0.42785714285714285714285714285714 BTC that I received would be worth only $27.81 at market prices. Hmm, that's funny, I just paid 7.1% in transaction fees before paying the transaction fees. (We're obviously operating in a perverse hypothetical world where elementary schoolteachers would both understand that option, have BTC available to spend, and be happy spending them, and where I would consider actually implementing this.)
It's possible that the payment processor I was working with would absorb this risk for me, because they hope to keep my business. That would be an extraordinary dangerous decision for them, because they're now running their merchant payments operation as a sideline to currency speculation. (Which I suppose makes them a perfect fit for the Bitcoin community.)
If you were 1) very determined to sell in BTC and 2) could buy USDBTC options you could probably sell in BTC and limit your exposure to the fx risk.
Yes, and anyone whose business involves juggling chainsaws has to pay an awful lot for workplace insurance, but Bingo Card Creator doesn't involve chainsaws. Bitcoin proponents love to say "No transaction fees! Can your credit card processor do that?" while perhaps forgetting to mention that the actual mechanism for achieving this involves you juggling chainsaws.
If it works out like that, neat play for them. If it doesn't -- "oh well, startups are risky". Fair game for teams that have such stamina. ;)
When it comes to BTC, right now, all bets are off.
In theory how it would work is that your payment processor would get a price from an FX broker who would guarantee it for a fixed period of time (say 15 minutes) but would offer a worse FX spread with the difference between the offered spread and the market spread being their compensation for taking the risk.
The FX broker would mitigate some of their risk internally (against other customer who want to transact in the opposite direction) and through purchasing spot/forwards/options. As the volatility of the market increased the broker would widen their spread so as to avoid being over-exposed at any point. The business of the FX broker would fundamentally be one of risk-management.
So from a customer view point they'll get a crappy exchange rate compared to what they'd get from a BTC exchange, but they'll be able to do the transaction.
In reality this is quite similar to what happens in multi-currency transactions anyway, if you're buying something priced USD with a EUR credit card you'll typically:
1) Get a "frozen" rate (i.e. you'll get charged a specified amount of EUR) which is worse than market rate (as described above) .
2) Get charged the USD price at whatever the market rate is (-ish, there's still some markup on this) at the time the transaction goes through.
(some smaller vendors just have fixed prices in different currencies; this means that the vendors themselves are taking the currency risk)
It'll be interesting to see how the model and fees develop, as Btc exchanges move from the current x% model to the inevitable x% + $y, $y, or $y/share model.
1% and 15cents? That's incredible.... Compared to the 2.9% and 30 cents most other payment processors charge.
I will be migrating my start up soon!
I really do feel that MtGox will move to a higher fee schedule as Bitcoin volume increases, so it'll be interesting to see the convergence of Bitcoin fees vs CC/Stripe/Paypal fees and how processors reconcile the two and balance growth (driven by lower cost) vs immediate profits.
1. Receiving Bank Fee 2. Sending Bank Fee (most of the charge) 3. Network fee (visa, mastercard, etc)
And a good amount of fraud built into those fees. Fees often vary by fraud risk, with internet and telephone charging ~3% and supermarkets getting around %1 already. Debit cards can be flat fee also.
And thats one of the reasons Satoshi started Bitcoin to begin with - transactions within the traditional money network have become very complex and expensive. One of the aims of bitcoin is more economically efficient transactions:
The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non- reversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party
Also, right now the value of their bitcoins will probably drop by more than 2.9% in the time between them buying the coins and being able to send them.
Pure speculation, but this could simply be a case of OKCupid wanting to support the Bitcoin ecosystem by providing a service that can be paid for directly in Bitcoin, thus raising the attractiveness of accepting Bitcoin as payment, further strengthening the system. To do this, they'll probably have to put the long-term net value of their Bitcoin holdings as zero, but they can probably afford that.