US-based flight aggregator CheapAir has been accepting Bitcoin (BTC) payments since 2013, and has recently made headlines after it revealed it was now accepting Bitcoin Cash (BCH), Dash, and Litecoin payments as well.
The company’s move was made partly due to customer demand, and the company’s chief executive officer, Jeff Klee, noted that its cryptocurrency customers “tend to be very vocal about what they want.” What they wanted, Klee added, were alternative currencies.
CheapAir’s involvement in the cryptocurrency community is notable. The company recently asked its cryptocurrency-using customers for feedback on which crypto payments processor it should go with, after Coinbase moved to replace its Merchant Tools in favor of Coinbase Commerce.
Taking into account the company’s years and experience in the crypto space, CryptoGlobe decided to catch up with it and interview its CEO. During the interview, Klee revealed accepting Bitcoin was “one of the best decisions” he ever made for CheapAir, and that he’s somewhat of a libertarian.
CG: Can you introduce our audience to CheapAir?
Jeff Klee: This is a company I actually started when I was in college in 1999, it was pre-internet. It started out just as a hobby, I was selling spring break trips to friends of mine and other people in college and when I graduated I decided to stick with this travel thing while I figured out what I really wanted to do. Then the internet came along and that was combining two things I really love, so at that point I really commit to doing it for the long haul.
CG: Who was behind CheapAir’s decision to accept Bitcoin?
Jeff Klee: It was my decision. At the time I had read articles about Bitcoin, and I didn’t know too much about it but I was always intrigued about it when I read about it. The idea came from a customer. One of our customer services reps came to us one day and said “hey, a customer wants to know if they can pay for a ticket in Bitcoin.” The customer service didn’t even know what Bitcoin was, but it got me thinking about it. We did a little bit of research and quickly came across Coinbase and realized it would be pretty easy for us to integrate, so that’s when we made a decision to go ahead and see where it would lead.
CG: Is Bitcoin a big part of CheapAir’s business?
Jeff Klee: It has definitely gone up in the last year. For most of the time we’ve been accepting it it’s been roughly 2-3%, but that number has grown as Bitcoin has become more popular. It’s still a minority of our business, but there are a few things we really like about it: it’s enabled us to reach customers from around the world. The profile of a Bitcoin customer is very different from our other customers, Bitcoin customers on average tend to buy more expensive tickets and what we really appreciate is the loyalty. So many people come back again and again. That’s what we’re striving for, it’s to get loyalty. We appreciate the loyalty that we’ve gotten from the Bitcoin world.
CG: So, would you say that a customer may come back to your business because you accept Bitcoin?
Jeff Klee: I think there’s no doubt about it, that a lot of our customers who pay with Bitcoin would not be customers of ours if we weren’t taking Bitcoin. We look at it as incremental business, when we started accepting Bitcoin we didn’t have a bunch of existing customers who suddenly said “oh we can pay with Bitcoin,” it allowed us to get new customers, which we’re grateful for.
CG: Was it a risk that paid off?
Jeff Klee: It wasn’t a huge risk, other than the time and effort we put into it. Unfortunately, an airline isn’t going to take Bitcoin from us. When someone pays us, we have to pay the airline almost in real time, so almost all of the Bitcoin we get we have to convert into dollars. The risk we took was on the time developing, which was very much worth taking.
CG: Following up on the risk: Bitcoin is an extremely volatile cryptocurrency, does the company keep any of the Bitcoins it gets?
Jeff Klee: Most of it goes to fiat, but we keep some. Primarily for refunds and other types of payments that we can make in Bitcoin. Most of what’s coming in is going right out to the airlines, in dollars.
CG: Has CheapAir had any problems with regulators so far? Does it see regulations hinder its business?
Jeff Klee: We haven’t had any problems with that. I think maybe indirectly. No one knows why Coinbase is doing what they’re doing, but I think the theory is that they’re worried about some of the regulations that are forthcoming. We treat Bitcoin revenue like any other revenue, we’re not overly concerned about it at the moment. I hope I’m not being naïve for not worrying about it, but for now it hasn’t been a problem.
Jeff Klee: At the moment, we’re definitely open to other cryptocurrencies but there are two criteria: one there needs to be a demand for it – of course – but there also needs to be a market where we can easily convert it to fiat, because we need to easily pay our suppliers right away. Right now we’re using GoCoin as a processor to accept Dash, Bitcoin Cash, and Litecoin. They’re working on adding Ethereum, we will add it when they do. As far as other currencies we will have to find a processor.
CG: The company started accepting Bitcoin in 2013. That’s pretty early, do you think the experience people have with the company can help newcomers learn about cryptocurrencies by giving them a real use case?
Jeff Klee: Yes I think so and I hope so. At the time there was a wave of merchants who started taking it. The hope was and still is that the more merchants accept it the more it becomes a viable currency for people to use and transact with. I’m concerned Bitcoin has become much more of an investment vehicle than something people use for transactions, so I’m not sure where the future lies. We see the value in decentralized digital currencies and hope they continue to grow and gain tractions. It’s still too foreign of a concept for a mainstream consumer, and that’s been a problem.
CG: Are you personally bullish on Bitcoin? Do you think it’s a bubble?
Jeff Klee: No, I don’t think it’s a bubble. I’m definitely bullish on it, [alhtough] in the US I’m not very optimistic it is going to gain traction as mainstream currency for two reasons: one if we have the dollar which is pretty tough to compete with, and from a user’s point of view, for people who don’t care about the ideological value for Bitcoin and are just “what’s in it for me.” When you use a credit card there’s a lot of consumer protections that people like in the US market.
Bitcoin and all the other digital currencies have a lot more appeal right now in developing countries where there isn’t a strong as a currency as here in the US. I think it’s going to take time, but I definitely don’t see it as a bubble. Blockchain technology has lots of applications beyond Bitcoin.
CG: Recently various mainstream Wall Street personalities, including Warren Buffett and Charlie Munger, slammed Bitcoin. What do you think about their point of view?
Jeff Klee: You could find someone who takes every side of every issue. There are also people who are saying Bitcoin is going to $100,000 or a $1 million within the next year. I tend to discount the extreme views on both sides. No one knows what’s going to happen, any of these scenarios could be true but I still think Bitcoin has value and is good for the world.
CG: The Swiss government recently started looking into the risks and benefits of developing its own state-backed cryptocurrency. Do you think these could be better for merchants?
Jeff Klee: In some aspects it kind of defeats the purpose. State-back cryptocurrencies are kind of a lateral move. The whole premise of Bitcoin and cryptocurrencies is that there’s no central authority – from my standpoint, where I fall on this ideologically – the central authority that concerns me much more than the government is the banks.
Bitcoin takes out the credit card merchants fees and most consumers don’t realize that depending on the country you’re in, there’s about a 3 percent charge built in to the price of everything that you buy, to cover credit card and bank fees, and these are relics from decades ago when it was more expensive to process transactions. There’s no justification today to have such high fees to move money around.
As far as a government-backed cryptocurrency I’m not opposed to it, but what’s the point? It’s not the worst thing in the world, but how does it help us?
CG: Thank you for your time! Is there anything else you would like to share with our audience?
Jeff Klee: It’s been a really nice ride for us, and for me personally. I’ve met a lot of fascinating people since we’ve been accepting cryptocurrency and I’ve heard some great stories. I look back at this and it’s one of the best decision that I’ve ever made for my business. In some ways I kind of lucked into it, but it’s been fun.
Note the above interview was edited for clarity and brevity.