For users who have never used Bitcoin, the cost and time involved in acquiring something as small as $3.99-$29.99 is quite high. It would likely cost as much as 10-50% of that cost in fees.
So I'm not sure if this will create new bitcoin users. But more vendors always helps.
Well, it's an alternative payment method, i.e. one people should use if they don't want to pay via PayPal/Google Checkout. E.g. it's for people from outside of USA.
I'll give you an example. I live in Ukraine.
When my father wanted to buy something via PayPal, he had to:
* get a debit card, which requires going to bank, signing some papers, etc. (Ukrainians often have debit cards for receiving salaries, but those usually have internet payments completely blocked. Ukrainians rarely have credit cards.)
* fill it with USD, again going to bank.
* register on PayPal site
* call bank to unblock internet payments (this requires ~10 minutes)
* try paying
* call bank again, apparently they haven't unblocked it
* try again
* Success!
Now let's compare that with what I did to get bitcoins in btc-e account:
* register on btc-e
* select deposit via interkassa
* go to cash terminal nearby, deposit UAH
* so I got USD on btc-e account and can buy BTC with it
So it actually takes less time than dealing with bank cards/PayPal, and isn't expensive (there is, maybe, 2% fee for deposits).
> the cost and time involved in acquiring something as small as $3.99-$29.99 is quite high. It would likely cost as much as 10-50% of that cost in fees.
Where are you getting these figures? I can pay 0.5% in fees or less to purchase bitcoins on MtGox. Other solutions are nowhere near 10%.
Okay, but that 11% figure is mostly because of your traditional bank, which charges for deposits (wtf?)
Lets say I want to $100 to a friend in Mexico:
* My bank doesn't charge me for deposits. (still $100 USD)
* Coinbase charges 1% to convert my USD to BTC (converted 8.947 BTC at 11.05usd per btc)
* Sending that to someone else costs almost nothing (8.947 BTC).
* The person receiving is not charged anything, unless they want to convert to another currency (e.g. pesos)
In this scenario, there is certainly slippage / costs, but it still beats MoneyGram, WesternUnion, Xoom, etc in terms of cost to send money from country to country.
So I'm not sure if this will create new bitcoin users. But more vendors always helps.