The county expects the new system to be faster and cheaper than regular card payments.
Seminole County, Fla., will soon become probably the first local government in the U.S. to accept payments from citizens in Bitcoin, as well as its cousin cryptocurrency Bitcoin Cash.
It’s not that Joel Greenberg, the county’s tax collector behind the initiative, is going to direct his office to actually start stockpiling Bitcoin from the residents and businesses that send in money for everything from property taxes to concealed carry permits. Rather, the system he’s using — from third-party vendor BitPay — converts Bitcoin and Bitcoin Cash into U.S. dollars.
So why do it? According to Greenberg, it’s both faster and cheaper.
When a customer pays using a credit card, they face transaction fees in the 3-4 percent range.
“That starts to become pretty substantial when you’re paying these larger bills,” Greenberg said.
That is, for people paying property tax on commercial spaces, their payments can be multiple tens of thousands of dollars. All told, the office handles close to $1 billion each year.
For BitPay, the transaction fee is 1 percent. Of course, a customer has to pay a transaction fee to buy cryptocurrency in the first place.
The crypto payments should also get to Greenberg’s office faster. When a customer pays by card, it can take three days to reach him. With BitPay, he expects the payment to come through the next day.
“We’ve got a third party that’s making a crap-ton of money off us for doing nothing but being a bank essentially,” he said.
There's normally a risk, when converting between dollars and cryptocurrency, of price volatility — just like with international currency, rates can change at a moment's notice. But with BitPay, the company gives users a 15-minute window within which it guarantees the conversion rate. So there shouldn't be a risk that the amount of money that shows up in the tax collector's account is different from the amount the citizen paid.
"That’s a price volatility risk that BitPay takes," said Jeremie Beaudry, BitPay’s head of compliance.
From the company's perspective, that means it could take a financial hit or make a profit during that guarantee window, depending on how the price fluctuates during the process.
The system is already set up, and didn’t take much work at all on Greenberg’s end, but he said he wants his office to do a bit more work on the website before rolling out the feature to residents. Once it’s up, residents who are trying to make a payment should be able to select an option to pay in Bitcoin or Bitcoin Cash.
He said he expects to launch the BitPay functionality in the first or second week of June.
“I’m interested to see how many people choose to use this route,” he said.
Though Seminole County is the first government client in the U.S. to use BitPay, Beaudry said he's been pushing for others to try it as well. Arizona has eyed legislation to enable crypto payment to governments, and Georgia is on his radar as well.
“I’m gonna try to push forward with a bill that would allow the whole state of Georgia to move forward with crypto payment,” Beaudry said.
State and local governments across the U.S. have started examining blockchain — the transaction-recording paradigm on which Bitcoin operates — for a number of potential uses in recent years. In South Burlington, Vt., the city clerk’s office is trying out a system that records property deeds within a blockchain. West Virginia is running a pilot test of a blockchain-based voting system. Berkeley, Calif., is considering issuing municipal bonds on blockchain.
“It’s not scary,” Greenberg said. “It’s sort of the future and where everything is going.”