Beer for bitcoins: Inside a bitcoin pub
Friday 09 May 2014
Stephen Early is one of the directors of a chain of six pubs in the southeast of the UK – all of which accept bitcoin payments. In fact, one of the pubs was conducting bitcoin transactions as early as June 2013, well before most people had heard of the cryptocurrency. BitScan finds out a little bit more about how it all works and what motivated him to create a bespoke system for allowing customers to pay in bitcoin.
It’s all a pretty seamless experience. You go into the pub, order your drink and ask to pay in bitcoins. The bartender brings you a receipt with a QR code, which you snap with your smartphone. Once you’ve checked the amount and sent the right amount, the till confirms the transaction has been completed and you’re done. It’s a bit of a novelty and a fun way to pay for a drink, but there’s more to it than that: bitcoin payments offer solutions that otherwise aren’t available for small businesses.
"I became aware of bitcoin in 2010. I bought some bitcoins using the now-defunct ‘Britcoin’ exchange in June 2011, but then didn’t do anything with them for ages. Bitcoin was in the news in the first couple of months of 2013 and that reminded me," says Stephen.
Having studied Computer Science at Cambridge University, in the town where two of the pubs are located, Stephen had a good background for building the system that’s now used across the chain of pubs. During his studies he had also started volunteering at the local beer festival. "I got into selling beer when I was looking for a career change!" he says.
Doing the accounts, bitcoin style
One of the frustrations of running a pub is doing the accounts. In any given day you might process hundreds of transactions, many of them carried out on a card terminal. If that’s the case, the terminal prints out two receipts: one for the customer, one for the pub. But this is not integrated with the till: the bill has to be entered manually into the till from the receipt. At the end of the day when the takings are added up, ideally the totals from the card terminal and those entered into the till will add up. But it only takes one mistake to create a discrepancy...
"What I would like to happen when accepting cards is for the till to transfer the transaction total over the network to the card machine, and for the card machine to send a response at the end of the transaction with the cashback amount and receipt number. This would remove the need for values to be copied across manually. It sounds like a small change – but I can’t find anybody who will sell me equipment that does this! It clearly exists because I see it in supermarkets, large chain pubs, and so on – I just suspect that my company is seen as too small to be worth selling to."
Stephen coded his own software in Python/Django to give him a system that would work the way he wanted it to. This runs from a data centre, along with a copy of the bitcoin client, connected to the pub via a VPN. When a customer want to pay with bitcoin, the software looks up the current exchange rate and fetches a new Bitcoin address from the Bitcoin daemon. A bitcoin: URL is returned to the till, which converts it to a QR code for the customer’s receipt. At the end of the day, the total takings are requested and returned automatically. "Bitcoin lets me build the kind of system that I wanted to build for accepting cards, but couldn’t," Stephen remarks.
Stephen collects the bitcoins paid and cashes them out periodically using Bitstamp – sometimes at a loss, sometimes at a profit. "I don’t mind holding onto bitcoins for a while to pick the right time to cash out," he says. He also spends them online occasionally, using services such as Humble Bundle.
At the beginning of the year, bitcoin takings were as high as £1,000 a month. "It’s dropped a bit recently; I suspect that when the exchange rate drops people don’t feel so happy about spending their bitcoins."
Not only that, but accepting bitcoins avoids the payment processing fees that credit card companies charge (which are usually borne by the merchants). These vary but typically run to around 2.5 percent. Taking bitcoins has the potential to increase profit margins significantly, though perhaps more so in low-margin sectors which rely on large numbers of transactions to stay afloat.
The downsides? There aren’t many. One pub we checked out in Cambridge gets periodic visits from the Cambridge Bitcoin Society. "It worked great, the orders were just flying through," the bartender told us of one evening. "We were printing out receipts and taking their smartphones to the till, rather than bringing the receipts to them, so it all went really smoothly."
It’s one thing for a couple of dozen tech-savvy students to order their drinks that way. The problem comes when someone decides to test out their new wallet app on a busy night when they don’t really know what they’re doing. "That can hold things up a the bar, a bit," admits Stephen.
Stephen has no immediate plans to expand his bitcoin services or to get into other cryptocurrencies, but we’ll be watching developments carefully. If you want to find more businesses that accept bitcoin, take a look at BitScan’s business directory and download a decent wallet app – I recommend Blockchain’s mobile app.
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