SpectroCoin Takes on BitPay in Europe With Bitcoin Processing Solution
SpectroCoin has launched a new bitcoin merchant processing solution for the European market, adding yet another vertical to its suite of solutions.
The UK and Lithuania-based company also offers a bitcoin wallet and a bitcoin brokerage, services that it believes will position it to become an all-in-one financial services company comparable to Coinbase in the US.
SpectroCoin‘s similarities to Coinbase are notable, as the company also aims to challenge that company’s main rival in the US merchant market, BitPay. Notably, BitPay has recently made the European market a focal point of its strategy, adding 220volt, AirBaltic and Shipito to the ranks of its clients worldwide in recent months.
However, SpectroCoin CEO Vytautas Karalevičius believes his company has a crucial edge in that his business given its slew of existing services, explaining:
“We are more flexible in our solution, because we are more looking to accommodate the specific needs of our merchants, providing full support to them. BitPay is more attractive to small clients who don’t need full support.”
SpectroCoin currently provides localized payments to nearly 30 countries in Europe. Using specific domestic bank accounts in each country, SpectroCoin is able to offer bank transfers in Bulgaria, Denmark, Latvia, Norway, Sweden and the UK.
Unlike with BitPay, SpectroCoin merchants can also choose to either keep the bitcoin they receive on their SpectroCoin account or cash out their payments into fiat currency.
A graduate of Cambridge University and a former Bloomberg employee, Karalevičius has worked to promote bitcoin both in Lithuania through media appearances and on the global stage, running unsuccessfully for a seat on the Bitcoin Foundation’s board of directors in April.
Entering Eastern Europe
Karalevičius said his company will aim to focus its adoption efforts on eastern and central Europe, noting that the Czech Republic, Poland and the UK are its key markets. More specifically, he said his company will focus on companies that sell virtual goods, such as tickets or services.
In his talks, Karalevičius emphasized that capitalizing on the cross-border capabilities of bitcoin will be a key part of SpectroCoin’s strategy, adding:
“It makes sense for our client base. If you can sell something online to say somebody from Australia, for example, you can expand your market size.”
Notably, Karalevičius suggested that SpectroCoin believes it will have the most immediate success serving markets that have not yet embraced the euro.
In particular, he noted how Latvia joined the Eurozone in 2014, and that Lithuania will do so in January, a development that he suggested may affect the ability of SpectroCoin to influence the remittance market.
Direct dial approach
Of course, Karalevičius acknowledged that raising merchant awareness regarding bitcoin would remain a challenge. To begin, SpectroCoin will aim to acquire clients through direct sales, seeking to win over merchants by first selling them on bitcoin and then on the company’s services.
Summarizing the challenges SpectroCoin is facing, Karalevičius said:
“The hardest part is actually trying to sell bitcoin, because when you try to sell bitcoin people still have many worries about it because of media coverage. Even if you can remove the price stability, some people don’t think the market is significant.”
Still, Karalevičius expects bitcoin’s low fees to be attractive to merchants. SpectroCoin will charge merchants a 0% to 0.25% free for each transaction, though the size of the fee will depend on the merchant.
Karalevičius added: “If a merchant is a non-profit we will charge 0%, for most merchants we charge more. But it depends if a merchant is strategic for us we can negotiate.”
Attacking pain points
Though his company faces challenges, Karalevičius was also quick to point out that e-commerce merchants are seeking solutions to their current payment issues, and that they may be more open-minded in light of these barriers to sales.
Specifically, Karalevičius noted the popularity of cash delivery services in his target markets. The services specialize in collecting cash from e-commerce buyers and then delivering the payment and product to the respective parties.
Still, Karalevičius believes other electronic payment options don’t offer much competition, adding:
“The key thing when you talk with merchants is most people still don’t like credit card payments. Most of them use direct bank deposits and that charges merchants 2%.”
Building a client base
Overall, Karalevičius framed the new service as one that will support SpectroCoin as it focuses on the main part of its service – its bitcoin buying and selling platform.
Karalevičius explained how adding merchants to SpectroCoin’s customer base provides a strategic advantage, saying:
“Why we tackled the merchant market is because from day one our goal was to have one solution for bitcoin –wallet, exchange and merchant. This lets us have economies of scale. We can have the people who like using the bitcoins for real transactions as well as the people who are buying bitcoins.”
With the formal launch complete, Karalevičius said he aims to now focus his company’s attention on acquiring new clients, concluding:
“We are now announcing it with a few small ones. We will have bigger ones later on, but these will be following announcements.”
Some quotes have been edited for clarity.