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I am selling SASS solution on my website.

How do I ideally educate customer to use bitcoin, which convince them to use bitcoin instead of paypal or other methods.

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Do you offer both Bitcoin and PayPal/other on your website? If so, offer them some discount, say 10% off, if they use Bitcoin. Tell them that it is due to lower processing fees. With some monetary incentive, you will convert some of your customers over.

If you offer only Bitcoin, put some link in a visible page stating something like "why only Bitcoin?", then bring them to a page in your FAQ where you explain your reasoning to use Bitcoin - lower development cost, lower processing cost, no charge-backs, freedom from third party companies, etc. etc.

Be sure to link to some accessable material for newcomers - for example, We Use Coins, or some materials from Bitcoin Wiki on Introduction.

  • A discount is a great incentive. Be sure to add to the FAQ "how do I buy bitcoin?" – Dr.Haribo Oct 5 '12 at 11:45
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Presumably you want your customers to use Bitcoin because it benefits you in some way. Perhaps you get hit with forced chargebacks when using PayPal that you wouldn't have with Bitcoin (i.e., any refunds given would be initiated by you as the service provider). Or perhaps the lack of fees versus PayPal (which cost 2.9% + $0.30 per transaction) are a reason why. Or perhaps the proceeds are used to pay vendors, and the sooner the funds clear the sooner they can be put to work (bitcoin transactions are available for spending in about an hour).

So sharing with the customer some of the gains the come from the switch to Bitcoin are one approach. If the customer is presented with the invoice -- $100 when paid with PayPal / Credit Card, or $98 worth of bitcoins, then the choice is up to the customer but they are probably going to look into these.

If the customer has to pay 3% or more to get bitcoins (which is common using "instant" methods), then this financial incentive is a wash or less appealing. But there are bank transfer methods which reduce the cost significantly (e.g., Using Dwolla with ACH bank transfer in the U.S., the bank transfer is free and teh cost paid to Dwolla is $0.25 per transaction. Then the exchange fee is likely just half of a percent. That's it then!)

Now if your business offers to accept bitcoin and your competitors don't, that alone gives it a competitive advantage as those of us who already hold bitcoins are likely to spend with a Bitcoin-friendly merchant versus one that isn't. For instance, even though Amazon doesn't accept Bitcoin yet, their gift codes are easily obtained with bitcoins (i.e. several sources). And thus of all the places computer hardware and consumer electronics is offered, more bitcoins are effectively traded for purchases at Amazon than anywhere else. Amazon gains market share by simply offering a method in which ultimately bitcoins are used for purchases and its competitors don't.

Though there is no guarantee, there is the chance that bitcoins bought now and held will be worth more in the future. Consumers generally don't understand speculation and tend to feel cheated when ending up losing from it, so encouraging consumers to speculate probably isn't in a merchant's best interest. However a merchant might be willing to absorb the risk instead. For example, an annual subscription could be offered at a discount where payment is made in bitcoin and the merchant essentially escrows the bitcoins. If the value of bitcoin drops, the merchant still offers the service but absorbs the difference in the price paid. If the value of bitcoin rises, the merchant takes the profit. The consumer is happy in either instance -- service was obtained at a discount, yet the merchant may benefit greatly if the future exchange rates end up favoring the merchant. Now if the service doesn't have high margins, then this approach may not be good, as the merchant might not be able to continue providing the service at a loss if the bitcoin exchange rate drops significantly -- so this approach may not work in many instances.

Essentially, it comes down to this -- most consumers don't know nor care if you accept bitcoin, they are going to use the method they already know. Inertia. Now if it is important to you that they switch to Bitcoin, you need to give them a reason and incentive to change the inertia. Changing customer behavior is the aim of marketing and business strategy. There likely will be more and more organizations discovering that Bitcoin brings advantages that it starts becoming important enough to allocate resources and getting the ball rolling.

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