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I think there's more of a stigma than you might expect.
I'm almost positive that the hipster coffee shop I was trying to onboard, the owner who's behind the counter (who I know by name and have a great relationship with), doesn't want to be known as the Bitcoin coffee shop. All the 25- to 35-year-olds in the coffee shop think it's a Trump scam.
I could be wrong, but I really think that's part of what's going on. In the city I'm in, some people are having better luck onboarding small business owners in the suburbs. I am forced to live closer to downtown, where it's deeper blue, and younger, so I do think that's some of what's going on.
With 0% transaction fees I am surprised that more merchants are not pushing customers towards bitcoin. Especially if they can just convert it straight to USD.
How hard are Square communicating this to their customer base? As the incentives from their perspective are broken.