By Jon Matonis
PaymentsSource
Monday, April 8, 2013
http://www.paymentssource.com/news/government-fees-parking-tickets-may-soon-be-paid-in-bitcoin-3013753-1.html
While some call Bitcoin an “existential threat to the state,”
local governments could soon embrace the digital currency and payment
system as a practical alternative to credit and debit cards.
E-Gov Link,
an Ohio company that helps municipalities accept payments online for
parking tickets, permits, and the like, now allows its customers to take
bitcoin. Noting that “credit card purchases tend to carry high
transaction costs due to the middleman and due to the high costs of
fraudulent online purchases,” E-Gov President Bill Nadler emphasized
in a press release, “having a payment option that doesn’t carry that
heavy transactional cost is definitely a plus.” Bitcoin transactions can
be processed at a fraction of the cost of other payment methods because
they avoid the interchange structure of the legacy card processors.
Aside
from the benefits to merchants, bitcoin payment choices have
significant benefits to consumers who may have already received bitcoin
from others in the sale of products or services and do not necessarily
want to convert out of the digital currency. Broadening merchant
acceptance expands the “network effect” of a young currency and starts to make Bitcoin viable as an end-to-end payments system.
“We
know the bitcoin community is passionate about using bitcoin for
payments, and will be demanding it of their local governments,” said
Nadler. “We’re happy to be here to answer the call, as municipalities
scramble to find partners to help them with bitcoin.”
Naturally,
the use of bitcoin in local government settings will not be leveraging
its optional anonymity properties, thus demonstrating bitcoin’s overall
flexibility when compared to physical cash.
“We look at bitcoin as
a competitive advantage,” says Jerry Felix, Vice President of Software
Development at E-Gov Link. The company sees it as a natural evolution
for governments to accept bitcoin as the currency gains popularity and
like in other merchant categories, supporting bitcoin first creates a
first-mover advantage. E-Gov Link focuses on integrating bitcoin
payments into the shopping cart experience while relying on payment
processor BitPay to manage the bitcoin wallets and currency conversion.
“We
have customers across the U.S., in over 30 states. We’re dealing with
small and medium sized municipalities – cities, towns, townships,
villages, and counties, and we provide web solutions for them,” adds
Felix. Marquee client examples for the web solutions provider include
municipalities like Niagara Falls, N.Y., and Skokie, Ill.
For
now, a municipality has to step forward and ask E-Gov Link to enable
bitcoin payments – which is peculiar because other payment methods are
not selectively disabled.
It would be far more interesting for
these local governments to make it known to citizens that the bitcoin
payment choice is an option. Still, the offering from E-Gov Link is a
major step in that direction because bitcoin first has to be a viable
option for the local government. Whether bitcoin demand is
merchant-driven or consumer-driven, one thing is clear. Greater merchant
choices and new payment categories contribute to the increasing value
of the Bitcoin network.
Payments to government entities stand as
one of the primary economic lynchpins for the preferred monetary unit.
The obligation of the political authority to accept tax payments in
government fiat currency is what underlies its value. While this E-Gov
Link move does not cover tax payments demanded in a particular monetary
unit, it can be seen as a precursor to a political authority expressing a
preference for payments in a digital currency.