What Drives Bitcoin Adoption by Retailers

35 Pages Posted: 6 Mar 2018

See all articles by Nicole Jonker

Nicole Jonker

De Nederlandsche Bank (DNB); De Nederlandsche Bank

Date Written: March 1, 2018

Abstract

Decentralised issued crypto “currencies”, like bitcoin, have the potential to drastically change the existing retail payment system and even the monetary system. Insights into the factors that influence their adoption are therefore crucial. Using a large representative sample of retailers that sell their products online, we find that acceptance of crypto payments is currently modest (2%), but there is substantial interest among retailers to adopt crypto payments in the near future. Consumer demand, net transactional benefits and perceived adoption effort influence adoption intention and actual acceptance by retailers. Regarding non-financial factors, our findings suggest that service providers who act as intermediaries between retailers, their customers, and providers of payment instruments play a crucial role as facilitators of competition and innovation in the online retail payments market by lowering such barriers. The most serious barrier for crypto acceptance seems to be a lack of consumer demand. Information from consumers indicate that those who possess cryptos, don’t use it for online payments. It seems therefore unlikely that the adoption of cryptos by retailers will increase substantially, making it highly unlikely that cryptos like bitcoin will drastically change the existing retail payment system.

Keywords: bitcoin, cryptocurrency, technology adoption, two-sided markets, retailers, network externalities, cost, facilitating conditions

JEL Classification: D22, E42, G20, O33

Suggested Citation

Jonker, Nicole, What Drives Bitcoin Adoption by Retailers (March 1, 2018). De Nederlandsche Bank Working Paper No. 585. Available at SSRN: https://ssrn.com/abstract=3134404 or http://dx.doi.org/10.2139/ssrn.3134404

Nicole Jonker (Contact Author)

De Nederlandsche Bank (DNB) ( email )

P.O. Box 98
Amsterdam, 1000 AB
Netherlands

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

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