Can someone explain how this might me made resistant to payment blockades erected by Visa, MasterCard, PayPal, and the like?
Interledger is a payments clearing protocol modeled on IP where settlement is arranged through peering relationships. It is incredible good at low value payments.
Our next work in the space is beginning to open it up to Retail style payments through Open Payments[1]. Initially we are targeting mini payments (<$5). As these are poorly served currently with traditional options due to high fees.
However our final goal is much bigger. The real problem we see in digital payments is not MasterCard, Visa and PayPal but Apple, Google and Facebook. We had OpenId but we ended up only getting login with Apple, Facebook and Google. The same is going for payments. We believe Open Payments is a viable alternative to provide an open payments system that is not big tech.
[1] openpayments.dev
I'm kind of surprised nobody has automated using cryptocurrency for this.
It's possible to buy e.g. Bitcoin with a credit card from a hundred places (right?), so somebody creates a website that takes the user's credit card info, passes it through to any Bitcoin seller and then receives the Bitcoin and transfers the value to the target. From the user's perspective they just paid the target with a credit card.
The party actually charging the credit card is the Bitcoin seller, who isn't affiliated with the proxy transaction at all and could be transparently swapped out for anyone who sells cryptocurrency and accepts credit cards without the seller even being aware of the indirection.
You could presumably do the same thing with any asset whatsoever. The user gets a charge on their card for gold bullion or baseball cards, which get shipped to the payment exchange and then liquidated again with the proceeds going to the target. But that's probably just unnecessary overhead compared to using cryptocurrency.
If there are laws against this in some countries, the site itself would only be glue code running on a webserver, so couldn't it just be located in any place where doing this is legal?
Two things go wrong:
- credit transactions are reversible and bitcoin isn't, so the middle party gets stiffed by fraud
- you have to have a merchant account to take credit payments, and the networks will blacklist you if you do things like this
So they hold the Bitcoin in escrow until the reversibility period has expired. Also, this is presumably what the independent Bitcoin seller has to do anyway, because it's their problem rather than the middle man's.
> you have to have a merchant account to take credit payments, and the networks will blacklist you if you do things like this
But the middle party isn't taking credit card payments -- that's the point. They're just forwarding the user's credit card info to any unaffiliated third party who sells Bitcoin and accepts credit cards, and then giving the Bitcoin to the target. They're not really a payment processor at all, they're just a process automation website for doing a multi-step transaction in one step to reduce friction. (Though they are in a perfect position to take a small cut to cover their costs.)
Beyond that, if a major payment provider doesn't like you, you're basically sunk. Horror stories about businesses withering while their PayPal accounts are frozen are almost as old as the WWW itself.
If you're in the adult business, you pay extortionate fees irrespective of your fraud rate.
If you're in legal businesses that are illegal in some areas, you might not be able to transact at all -- even in the legal areas.
https://www.cbc.ca/news/canada/toronto/square-canada-1.53031...
The big example is when the credit card companies blocked Wikileaks in 2010: https://www.rawstory.com/2010/12/mastercard-visa-licenses-re...
A more recent example from 2020: https://news.gab.com/2020/06/26/social-credit-score-is-in-am...