This text demonstrates the first part for new ideas for a massive adoption of BCH among retail merchants around the world. This first solution is based on making each merchant an implicit point of sale for BCH. Being implicit because the merchant's function is to sell his product or service, not BCH, but it is possible to increase the number of sales and consequently his profit, using BCH, which is what I will explain in the next paragraphs.
Bitcoin is a payment service that does not use fiat money. If we analyze by this concept we will see that nobody uses bitcoin in the right way, as well, it can be concluded that bitcoin still does not work as it should work. It's been over 10 years and no one uses bitcoin as a decentralized means of payment. Payment method or payment service is different from currency. Currency, in this case, looks more like an accounting record, and when I tell a logist; - Accept bitcoin. It is as if I said accept a new currency, leave its stability and venture into something challenging, as if the daily challenge of your enterprise was not enough, however, if I say to a logist: “I offer you a card machine, which it will facilitate your sales ”. The merchant sees value and buys the product. Bitcoin enables both functionality, currency and payment service.
Payment service or means of payment, is something that requires adjustments, consultancy, which is what BCH lacks, so, let's say that this text is an outline, for big things that can be built, with immeasurable value for the whole society, just changing the concept to what really matters - PAYMENT SERVICE. Basically being the advantages of this service that I will present in these texts, this being the first part of three. In this text I want to show that we are extremely competitive as a means of payment, yes we are, and I can prove it.
The consumer's desire
We know that, in general, what the consumer wants is a discount, being more technical, what the consumer wants is to be able to buy more and more, that is, that his money is always worth more. Thinking about it, we know that the conventional market, which uses fiat money, offers a discount to compare in cash or offers credit for payment to be made in installments, in these two cases, the money that the consumer has at that moment ends up being worth more, and this feeling encourages consumers to spend more. In this respect, BCH can offer its deflation, but there is a problem of volatility, although for spot purchases, this volatility is practically nil.
The merchant's yearning
We know that the merchant wants to sell more in order to make more profit, and for that he can offer a discount on his merchandise or service, or even offer credit (the merchant offers credit implicitly, because the credit is, in fact, offered by financial institution). All of this has a cost, which is paid by the merchant, with BCH we can reduce these costs to close to zero, as the merchant can simply offer a discount on the purchase with BCH, but not in a passive way (I accept BCH), but in a way active (I can offer BCH), implicitly selling BCH to the customer who certainly wants the discount, just as he would with a credit card (I can offer credit).
How would that be (organic method)
It would be enough for the merchant to offer a discount on payment with BCH, and obviously most consumers would not have BCH to pay, so the merchant would require a minimum amount for the sale of BCH, higher than the value of a unit of the product or service time. This amount must be sufficient to cover the discount given, through customer loyalty.
The importance of customer loyalty
The variables in the formation of the selling price are, total costs (the sum of fixed and variable costs), taxes and profit margin, if we reduce the price of the product or service we are actually reducing only the profit margin, and perhaps the costs variables via scale gain, in the short term. In a free and highly competitive market, if the merchant decides to lower the price, there will be a loss, and although he will sell more in the short term, he will still have a loss, but in the long term the result will change, if he manages to remain his competitors will be reduced. In the long run, unlike its competitors, it is more likely to make sales, and this will make it possible to make a profit.
In the real world, the market is not very competitive and much less free, so the simple fact that the merchant puts an air conditioner in his commercial establishment, allows him to sell his product at a higher price than the market, if that is a competitive advantage among other salespeople. The profit margin can be higher, the greater the differential of your product or service, accepting bitcoin is a differential, however not all customers are sympathetic to this, so forget the currency function, focus on the means of payment function, the recognition by currency will come later, because ease of purchase and sales by means of payment is something sought by both.
When a customer buys bitcoins at the store where he would shop, he first gains experience, as he learns to receive and use the currency, so he spends more time at the store, then creates a bond with the seller, and, finally, he has leftovers of coins in the wallet. All of these gains come from a mere discount. With the leftovers in the wallet he will have to go back to shopping at the same store to be able to spend the coins, and so the customer is loyal. Another advantage is that, in this type of spot market, the volatility of BCH is practically nil, and it will be necessary for the price to fall above the discount so that it will not be advantageous in the next purchase.
Imagine an ice cream store in Brazil, when a young customer arrives at your store accompanied by his girlfriend and asks for two cups of ice cream, which cost say $ 5.00 and the seller says; - With bitcoin you get a 20% discount. The customer imagines going more than once with his girlfriend to the store, and is interested in the discount. Probably the young client says: -I don't have bitcoin. And the seller responds; - I sell for $ 25. The customer realizes that he can get two free bowl after 5 purchases. The seller must say that this is true, if the price of bitcoin does not depreciate, as it is volatile, however, if it falls 20% there will still be no loss, and if the price goes up, there will still be gains in the wallet. Some young people would certainly find this very interesting, and if they like it, they will recommend it to their friends, they will also often visit the place, as well as research other stores that accept bitcoin, in order to earn discounts.
It can be noted that this is better than a cashback, as you can exchange bitcoin at any other store that accepts or exchange for fiat at any time. The trend is that the more stores accept bitcoin cash, the less loyalty the customer will have, however if reaching that level will be a success! But it does not end there, the seller can then create SLP tokens to maintain loyalty, when BCH is already accepted by most commercial establishments in the region.
Good for the merchant
All retail businessmen know the importance of retaining their customers. There are several studies that show the importance of a good loyalty program to increase the success of a company's brand and consequently its profits. But for that, the revenues from a loyalty program must be greater than the costs.
The loyalty program revenues include:
Greater frequency or volume of purchases;
Reduced customer turnover rate;
Greater demand for the brand, thanks to customer recommendations.
The costs of the loyalty program include:
Expenses with awards granted;
Accumulated liabilities for redemption;
Investment in IT and maintenance of the loyalty system;
Marketing and advertising;
Research and development to create the program.
These revenues and costs described above are from a conventional loyalty program, but with bitcoin the costs would be much lower, it is fantastic to know that we have a coveted service by almost all merchants, who have the costs, the only one responsible for the failure, and that BCH reduces these costs, theoretically guaranteeing the success of the loyalty program.
The program's revenues from Bitcoin Cash include:
Greater frequency or volume of purchases;
Reduced customer turnover rate; in two steps, with and without SLP tokens
Increased brand demand, thanks to customer referrals and bitcoin brand support
The costs of the Bitcoin Cash program include:
Expenses with awards granted;
Accumulated liabilities for redemption; Investment in IT and maintenance of the loyalty system; Marketing and advertising Research and development to create the program.
It is observed that bitcoin is a great payment service for providing customer loyalty to the merchant, with less costs, leaving only the cost with the discount (expenses with awards granted). There is no redemption liability, as the dealer will receive the payment and will be able to exchange it for Fiat money at the same time. All expenses with IT Marketing, Advertising, R&D can be carried out by the bitcoin cash community.
How would it be? (steroid method)
If major Bitcoin Cash investors understand that every satoshi invested to foster this type of program is an investment, which can make the BCH exceed the value of the BTC, they would finance the discount for the merchant, as BCH is a scarce currency and pressure on demand make the price go up, then pay to use the currency, and keep a BCH community active, creates a multiplier effect that generates profits in the long run, profits that will be very high, today BCH is worth 1% of BTC. Can you imagine where profits can go?
Just as Noise.Cash is a success, and promoted greater use of the BCH network, financing the seller's discount would cause the demand for BCH to increase exponentially, as all merchants would love to have a product that facilitates online shopping, which is very important in this pandemic period, practically zero cost, which offers a loyalty program, a discount, and which makes the merchant more competitive than its competitors, and also brings a novelty, as well as the merchant can take advantage of the Bitcoin brand, and thereby attract more attention. The success of something like this is indisputable!
All this with a 20% financing, for example, unfortunately an investor can lose 20% on a bad day in the market, however if he finances this amount free of charge to a merchant, the investor will generate demand for his scarce currency, by doing with that all merchants accept. Today 2% of the world's finances are in cryptocurrencies, with the service sector of the world economy representing 61%, this is much higher than wanting to be gold, as BTC claims to be. So I ask big investors; What's better, having 100,000 BCH worth $ 700 or having 1000 BCH worth $ 100,000 dollars?
The role of the community
It is admirable the work of Panmoni and Satoshi Angels in spreading the BCH among merchants in various parts of the world. It would be very interesting to discuss a loyalty program in both institutions. Panmoni is already focusing on international purchases, as it found BCH's competitiveness for this segment, being a smart idea. Satoshi Angels works with the merchant's evangelization to accept BCH as money, but I fear that it only has strength in hyperinflation countries, where fiat coins are practically unusable. Both are good alternatives, but they should improve. BCH can be competitive in any country in the world, with any type of economic situation, if it provides a valuable service for merchants and consumers, and BCH can offer this, not only as a currency, but as a means of payment.
What sets BCH apart from all other currencies is its vision of being a currency for retail payments, and its efforts for mass adoption, but this needs to evolve, ideas of just inducing merchants to use are not enough. An organizational arrangement focused on BCH as a payment service is necessary.
It is also necessary the support of Exchages and / or mining partners who offer liquidity, make promotions and donations (which is actually an investment), we need consultants in the communities, we need to form active communities focused on not only presenting the BCH, but selling the BCH to merchants, showing the merchant that we have a product that can increase their profits, a big investment in marketing is needed. I know this exists, but it has a limited focus, it is not to convince the merchant to use BCH, it is to convince to BUY the BCH. We need to create products with BCH and invest in your advertising.
I like to imagine a small supermarket accepting BCH offering discounts and having a good loyalty program, while its competitor, although perhaps much larger, and with its own financial service, cannot compete, because it is using fiat money, and in this crisis, credit is scarce, and the whole conventional credit system cannot do much, while the small supermarket, the one that did not have access to a financing system, is able to offer more and more promotions, because with each sale the price of BCH increases, so more consumers buy in this small supermarket, that is, in theory we can offer a valuable service, which allows to increase the competitiveness of the small retailer, creating a differential for this small merchant. After all, if Bitcoin for people is their own bank, it can be for the small merchant their own financial services institution, and make a lot of money out of it. We will democratize financial services for merchant as well.
The text presented the importance of bitcoin as a payment service, and its high competitiveness in providing a loyalty program to merchants, with the merchant being an active agent selling BCH implicitly, as well as "selling" the services of financial companies and credit cards.
With funded BCH communities, it is possible to carry out all the advantages of bitcoin as a payment service, and present merchants with a loyalty program, which for the merchant would have a reduced cost compared to conventional loyalty programs. With two options; Organic Loyalty Program, or with Steroids.
It was demonstrated that, in theory, the program could make BCH, be very attractive to retail merchants, adding value to your enterprise, by enabling an online payment method, almost free of charge, which allows for a discount and a loyalty program. As also differentiate yourself with the BitcoinCash brand.
Finally, in theory, if platforms like noise.cash managed to make BCH outperform BTC in transactions, only with free tips. A free discount on purchases could make BCH surpass BTC in market value. Being of fundamental importance, the support and financing of BCH communities around the world to be able to disseminate the services that BCH can offer to merchants.
BCH - Brazil
I hope you liked the text. Be sure to comment what you think. This text may have several grammatical flaws, since English is not my native language. I would be grateful for any corrections, grammatical or methodological.
Peace be on you.
The BCH adoption will be easier for small merchants and product creators, since they have a smaller supplier chain or control it completely (that is, either produce what they sell or have a lower number of suppliers). For a merchant to accept BCH, the supplier also needs to accept it. The obvious way would be exchanging the BCH for fiat, but the exchange price is still volatile these days. Once you eliminate the need to exchange for fiat, BCH and other crypto will face no barriers for adoption.
What I specially enjoyed on your article was the use of SLP tokens as a loyalty system. This is indeed a good start to accept BCH at shops. Customers which are not aware of BCH will start to learn about it to claim the rewards, and those which are already familiar will come back to the shop at the future and maybe start asking the owner when BCH will be accepted. By seeing the SLP tokens being spent, shop owners could get an idea on how BCH would be used as currency by the customers.