Small and specialised tea growers are working with a U.S-based online tea marketplace to explore the option of using digital currency bitcoin as a means of avoiding heavy banking fees and to expand international business.

Hawaii-based Tealet facilitates tea purchases between small tea farmers and the beverage’s global connoisseurs, a form of online direct selling, and has signed up a number of independent tea growers in Assam, West Bengal and Bihar.

“Our website, quite simply, sells these growers’ tea. What the growers do is ship high quality, single-origin tea to our warehouse in California, where it is distributed to tea subscribers. Tea is also sold in bulk to retailers on consignment for the growers,” said Elyse Petersen, CEO, Tealet, in an interaction with The Hindu on Tuesday.

For smaller tea growers, this direct selling process cuts out the middle-man, thus, providing better profit margins. According to Rajiv Lochan, Founder, Lochan Tea, which exports around 2.5 million kg of tea a year, the Tealet process can deliver up to 100 per cent more profit.

“When we sell through the conventional marketing system, we have to sell at the low-end. When we go through this modern route, it is the maximum-end, and the difference can be more than 100 per cent depending on the quality that you give,” he said.

For direct-selling companies , however, there are problems with setting up bank wires for the farms. Also, Tealet’s business model features a built-in loss of 7 per cent. This figure represents the cost Tealet pays to use major remittance players and cover foreign exchange fees. The company, therefore, has started to adopt bitcoin as an alternative payment system .

“Just as we bypass the middle-man and vendors through Tealet, bitcoin will let us bypass banks and online payment systems such as PayPal. Heavy transaction fees hamper business. PayPal, for instance, goes up to 10 per cent [as transaction fee] of the total amount transacted,” said Mr. Lochan.

However, the lack of domestic bitcoin exchange is now holding up plans to formalise the process. According to Ms. Peterson, Tealet is now approaching established exchanges that “we can integrate our growers’ business with”.

While bitcoins are not illegal in India, the Reserve Bank of India is “watching and learning about the developments in bitcoin” even though it has no intention of regulating it right now.