A Second Look at OKPAY, Bitcoin's Largest Payment Processor

In November of 2011, I announced the arrival of OKPAY onto the Bitcoin scene, which at the time was seen as a huge step toward the consumer popularisation of Bitcoin. OKPAY was, and still is, the first well-established payment processor to integrate Bitcoin into their services. Since the original announcement, OKPAY has continued to increase in popularity, becoming one of the top 10,000 sites on the Internet, and hence a member of our prestigious Bitcoin Ladder. OKPAY is also one of the top 1700 sites in Russia.

Its competitors from within the Bitcoin community, BitPay, WalletBit, and MtGox have obviously kept the pressure on OKPAY to remain competitive, and OKPAY has done just that by recently dropping their BTC to USD conversion fee to 2.50% from the 3.00% that it was back in March of 2012. BitPay is currently charging 2.69%, while WalletBit charges 2.75%. Mt.Gox is of course competitive with the straight BTC to USD conversions, but they also charge 2.50% on top of their trading fees for any other currency. OKPAY's 2.50% rate also holds for anyone wishing to withdraw their BTC proceeds via the OKPAY MasterCard debit card.

Uniquely, OKPAY has also aligned itself with two of the major Bitcoin exchanges, Mt.Gox and BTC-E, allowing users to withdraw funds from the exchanges to their OKPAY accounts, and ensuring OKPAY gets the best possible Bitcoin exchange rate.

OKPAY's service has drawn in hundreds of thousands of users, thus giving them an advantage through economies of scale, something BitPay, WalletBit, and MtGox may find difficult with which to compete, though they're obviously doing a great job of staying competitive, themselves.

The beauty of these payment processors is the fact that they allow a merchant to accept Bitcoins with zero risk, with fees very much competitive with, if not lower than, those of PayPal, Visa, and MasterCard. Add in the absolute zero chance of chargebacks, and you wonder why there are any merchants out there that are not willing to accept Bitcoin in addition to the usual currencies.

As always, it's exciting to see the Bitcoin payment processor space continue to grow with the Bitcoin economy, inevitably forcing traditional payment processors (*cough* PayPal *cough*) to either get with the times or potentially lose significant business.

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Okpay Launching Bitcoin Merchant Services Next Week

These guys move quick and are obviously serious about Bitcoin. Thanks to our friend Osmosis from stuffexists.com for poking them for the info!

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Will Mt.Gox Suddenly Become the Number Two Exchange?

The announcement from Okpay is really interesting for a number of reasons.

At the moment, Okpay is not paying very much for your Bitcoins; $2.63 USD when you can sell them on Mt.Gox for $2.95.

Okpay, however, grew its userbase to 300,000 in one year, and that was the number reported six months ago. How many accounts are there now? 500,000? By contrast, Mt.Gox had 38,000 accounts back in June. We're now staring down the barrel of a Bitcoin exchanging businesss that is over ten times the size of Mt.Gox. The only difference is, they don't sell Bitcoins; they only buy them.

What if, next month, Okpay announces that they sell Bitcoins as well? It would make good business sense, because they would avoid the fees associated with selling Bitcoins on an exchange, converting the currency, and transferring the money back to their accounts. They would also potentially become the number one Bitcoin exchange.

What would be the effect on the Bitcoin economy?

Let's say I was a regular Okpay user that carried a balance on the site, and I came across a Bitcoin merchant or service that appealed to me, like, I don't know, a casino or virtual goods marketplace and I wanted to do business with them. I'd buy Bitcoins, of course.

So, in theory, if Okpay were to sell Bitcoins, there would suddenly be tens of millions of dollars, i.e., a sum greater than the current value of the Bitcoin economy (I'm guessing here - assuming $20+/account on average), sitting in an exchange with the potential to be converted into Bitcoins. The number of potential Bitcoin users would also jump dramatically, by hundreds of thousands. At that moment, Mt.Gox would seriously find itself threatened.

Instead of money flowing towards Bitcoins, Bitcoins might now end up flowing towards the money. This would be the small-time equivalent of a bank offering Bitcoins to its customers, which would immediately remove all of the hurdles that people currently have to deal with to get their hands on Bitcoins.

All you investors and traders out there, I recommend you keep an eye on this site; it could represent the tipping point for Bitcoin.

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PayPal Competitor Okpay.com Now Accepts Bitcoin

Online payment processor Okpay.com has today announced that it is accepting Bitcoin deposits.

The site came online in March 2010 and has been increasing in popularity ever since. Alexa shows a very high ranking in Russia of 1,268, 19,411 in the United States (better than Diaspora's 19,825), and 15,516 globally.

The site reported 300,000 open accounts in March of this year.

This is the first serious commercial acknowledgement of Bitcoin's legitimacy as an electronic currency, and will provide Bitcoin users with dozens of additional ways to convert their Bitcoins into cash.

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