Stripe: Bitcoin Sign-up
stripe.com
stripe.com
Also hoping they implement the payment protocol (BIP70), which gives a much better user experience and improved security. Instead of copy pasting an address, a signed payment request is sent to the users Bitcoin wallet with a message stating something like "Bob's shop has requested a payment of 10USD (20mBTC) - accept?". Some particularly insidious coin stealing malware has been developed that modifies the payment address in the clipboard to be changed to an attackers address, and the whole UX around copying long Base58 encoded strings is horrible. Furthermore, the signed payment request serves as a receipt. With BIP70, the UX of bitcoin payments surpasses that of CC payments, IMO.
As I understand it, you can still feel pretty safe with 0 confirmations if you're monitoring the bitcoin network for double-spend attempts over the average network propagation time. If you don't see any double-spend attempts anywhere on the net by the time most of the net has seen your transaction, you're probably good. There are a lot of hidden pitfalls in bitcoin security (such as - the above isn't guaranteed, if miners change their mind to be greedy and pick the transaction with the highest fee instead of the first one, that method breaks) so I'm not sure if it's bulletproof though.
The above is much easier said than done. First, you're assuming you can have a good enough coverage of the network which is hard to assess. You need to do a constant topology analysis to see how well-connected you are. Second, you need to ask a chosen set of peers for all the transactions they have in their pool. And wait until they all reply. Third, you need to be pretty good at normalizing against malleability on all those transactions.
After doing all of this, the scheme is still not bulletproof. The blockchain exists for a reason.
Keep in mind that enabling this also opens up a counter-attack, against double spending: if User A sends 1 BTC to you with a fee of 0.0001 BTC, and you discover that, after sending this transaction to you, he sends the same 1 BTC to another address, this time with a 0.1 BTC fee, you can create a new transaction that spends the 1 BTC originally sent to you (with the 0.0001 BTC fee) which spends everything as a fee in this new transaction.
This way you don't actually get the money, the miners do, but you punish double spending. And if miners are greedy - and want to include whichever transaction makes them the most money - they will want include to include yours, as this makes them a whole 1 BTC in fees.
So in the end, while it may seem that miners including the highest-fee transaction increases the risk of double spending, it might actually prevent it, since merchants will also gain an effective way of punishing it.
Not sure if pool software currently selects txs as a sum of the fees of the txs that depend on them, but it seems reasonable to implement.
Stripe are obviously taking the risk of the volatility so will probably want to keep the bitcoin float that they hold fairly small. They also need to keep a reasonable margin on these transactions and watch for people who don't complete transactions unless the price moves in their favour (after the price has been quoted).
I assume refunds are of bitcoin to the agreed dollar value not the same number of bitcoins as was spent, otherwise there would be risks there too.
Edit: Found this in other story: https://news.ycombinator.com/item?id=7481219 (http://recode.net/2014/03/27/stripe-merchants-will-soon-be-a...)
Payments will arrive in their bank accounts in seven days or fewer. Neither Stripe nor its customers will hold onto the bitcoin, meaning the businesses that accept bitcoin will not be subject to the volatility of its price. Collison said his company is working with a variety of undisclosed partners to exchange the bitcoin into local currency in near real time.
Is Stripe a "startup"? Founded in 2009, they "process billions of dollars a year for thousands of companies of all sizes." and they are a "startup"?
As a consumer or business?
Because as a consumer, I've never had a complaint about my CC, ever. With the NFC chips built into all new CCs (at least here in Canada) I tap my card and leave.
You can't get more convenient than that. As such, I don't think credit cards are going anywhere.
Online, it's 23 digits that you don't know, and then 3-23 more fields (shipping address, billing address, name, email, etc. etc.) That sucks. Even at it's best in the Stripe Checkout model, it's less than ideal and extremely unsafe - it's so unsafe that American Express is RUNNING COMMERCIALS ADVERTISING HOW UNSAFE THEIR PROCESS IS! For your convenience, let's 2.9% and $0.30 of every transaction. That's a huge drain on the margin for a business of any size, but especially someone with checkout size about 10-50 bucks and margins of 10-40%.
So to summarize - online it's bad for consumers, bad for businesses, but it's the only way right now because hell if I know my account and routing number, and if I do the business still needs 3 days to make sure I own that account. That's the problem we've solved (I believe) but it's in its nascent stages. Bitcoin could potentially lend a lot of relief there too, which is why this is so exciting.
What are these commercials that AmEx is running? I assume they're presenting it as "convenient" rather than "unsafe" but it's obvious enough if you know what's going on?
Is my understanding flawed? How does a chargeback work when a third party does not exist and the protocol does not allow chargebacks.
Edit: Note that the merchant itself doing a refund is not equivalent. The important feature of a chargeback is that its a third party issuing it.
Shipping address, name, and email are necessary even if you use bitcoin. Billing address is usually the same as shipping address. That leaves the CC number, in which case the equivalent is your bitcoin address. So there's no real win here. And if you're using a regular online shop, then they probably have all these details saved. With Amazon, I can buy things with one click. With Newegg and other stores that I use regularly, its two. I haven't seen any bitcoin experience that matches that. Reading up on "experiences" people have with Overstock and Tiger Direct, it all seems very roundabout and inconvenient. And then you're hit with shit like no refunds to top it off.
> Even at it's best in the Stripe Checkout model, it's less than ideal and extremely unsafe - it's so unsafe that American Express is RUNNING COMMERCIALS ADVERTISING HOW UNSAFE THEIR PROCESS IS!
Pull is less safe than push, yes. Bitcoin is undoubtedly more secure than giving your CC number. But pull is more convenient for consumers, as I outlined above.
There's work-arounds for credit cards, such as virtual card numbers, but they haven't gained broader consumer penetration for the exact reason that they're inconvenient. In practice, the "unsafe but you can get the charges reversed" system works well enough that promoting a new system based on the fact that its safer isn't really enough.
> For your convenience, let's 2.9% and $0.30 of every transaction. That's a huge drain on the margin for a business of any size, but especially someone with checkout size about 10-50 bucks and margins of 10-40%.
Not every business charges 2.9%. Many get rates as low as 1% (this is what we charged large corporations, if I remember correctly). With bitcoin, you're going to get hit with transaction fees, exchange fees, and exchange spread. For small shops, its likely that will come out less than the CC fees, but for bigger stores its questionable.
Edit: Note that I hope these problems will be solved. Ideally, we see the Bitcoin protocol and ecosystem mature such that it is as convenient as a credit card and safer to boot.
Maybe I'm confused. Why is the address, name and email necessary for BTC payments? Is it a stripe requirement?
And, as you probably know, a bitcoin address is WAY more secure than a CC#. They are nowhere near "equivalent"
Its necessary in that they need a place to send your stuff. Email is often used for accounts and confirmation. This would also be stored by whatever system you are using if you are a repeat customer: Amazon, Stripe, etc. My point is that its a wash and that they are not comparing like for like in an attempt to make credit cards more complicated than they are.
> And, as you probably know, a bitcoin address is WAY more secure than a CC#. They are nowhere near "equivalent"
If you read my post beyond the first few sentences, then yes, I know that and specifically discuss it. The context of the first paragraph is discussing whether credit cards are more difficult to use in terms of inputting information. The equivalence here is that there is some number that you have to input somewhere to make the payment. Thats it. There's no other inferences beyond that.
Not for digital goods (maybe email)
> That leaves the CC number, in which case the equivalent is your bitcoin address
Most bitcoin payments are done either through mobile phone scanning a QR-code, or through uri's opening bitcoin software. I've never manually typed in a bitcoin address (worst case is copy pasting the payee address)
> I haven't seen any bitcoin experience that matches that. Reading up on "experiences" people have with Overstock and Tiger Direct, it all seems very roundabout and inconvenient.
Not sure what you've been reading, but my bitcoin purchasing experiences have all been extremely straightforward. Scan QR-code, press send, done.
> And then you're hit with shit like no refunds to top it off.
Uh...no you aren't. There's no chargebacks, not no refunds. That is, to get a refund the merchant has to agree. Basically, risk moves from merchant to customer (banks usually require the merchant to prove they delivered the goods in chargeback cases)
edit:
> With bitcoin, you're going to get hit with transaction fees, exchange fees, and exchange spread. For small shops, its likely that will come out less than the CC fees, but for bigger stores its questionable.
bitpay already offer 0% fees for a flat $30/month, and things can only get cheaper (as there get more/better exchanges and less volatility)
Yep, for one-time purchases of digital goods, Bitcoin is superior. For repeat purchases, like my Amazon Kindle purchases, you have to beat one-click.
> Most bitcoin payments are done either through mobile phone scanning a QR-code, or through uri's opening bitcoin software. I've never manually typed in a bitcoin address (worst case is copy pasting the payee address)
Ah yes, I forgot about this part. Although you can store your CC# in your auto-fill or password management software. And most stores will save it for you. The argument here is that is insecure, because you're storing your CC# and it can be stolen. But likewise, you're storing your Bitcoin private addresses on whatever device and they can be stolen as well. Except without any chance of recovery.
> Not sure what you've been reading, but my bitcoin purchasing experiences have all been extremely straightforward. Scan QR-code, press send, done.
Well I'm comparing getting an invoice, scanning a code, sending, waiting for confirmations with literally clicking a button to buy and then another button to tell Amazon where to ship my stuff. Or in some cases, just one button to buy and ship.
Then I accounted for the stories in which the invoice expired before enough confirmations, and apparently the order just evaporated despite the bitcoins being sent. And there's plenty of Coinbase horror stories from people trying to get refunds.
Broadening the use cases.. There's stuff like paying bills where I literally have to do nothing. Netflix, my electric company, Comcast, etc all just pull the funds necessary every month. I literally have to do nothing.
> Uh...no you aren't. There's no chargebacks, not no refunds. That is, to get a refund the merchant has to agree.
That was in reference to Overstock and Tiger Direct specifically. If I remember correctly, neither allow actual refunds of stuff bought with Bitcoin. They just give you store credit.
> Basically, risk moves from merchant to customer (banks usually require the merchant to prove they delivered the goods in chargeback cases)
That's a problem I have with it. Merchants are better equipped to manage risk than consumers, so pushing it back onto consumers is a bad thing.
> bitpay already offer 0% fees for a flat $30/month, and things can only get cheaper (as there get more/better exchanges and less volatility)
Didn't know that. I was going off of Coinbase's rates. Thanks for the correction.
What about the spread? The transaction fees charged by stock brokers approaches zero because they make the real bank on the spread.
Bitcoin's downfall in six words.
You're correct that there is no physical protection for the cash, but that is why most people do not carry lots of cash. Most store it in an insured bank account.
Bitcoin is very similar to cash in a lot of ways. This is both a pro and a con.
But I'll play the moving-the-goalpost game. For in-person transactions they have some similarities. They both have no chargeback or consumer protections, but we're receiving goods immediately so thats not a very large issue. Cash is instantaneous, unlike Bitcoin. Cash doesn't have exchange risk. Cash doesn't have transaction fees, while Bitcoin does. So cash is actually superior for an in-person transaction.
If I'm going to do an in-person transaction and am not going to use my card, why would I not use cash? If I don't want to carry cash, why would I not use my card? And if its an online transaction, then chargebacks are definitely something I want, even with a trusted merchant. So whats the use case for bitcoin? The OP proposed one use case; I assume that there are people who find that valid. It is not a case that interests me, personally, and that prompted my response.
Depends. Are you using a service that provides it, and are you willing to pay for it?
It's my understanding that it's explicitly against the merchant agreement with the big CC players to have different prices for different payment methods.
Of course, that's difficult to enforce in practice for every Ma and Pa operation, but if you're operating on any scale, where a significant portion of your revenue comes from CCs, that will be an issue.
Plenty of gas stations have a CC price/gal and a lower Cash price.
It was. Then there was a class action lawsuit against Visa and Mastercard brought on by Walmart, Target, Amazon, etc.
http://en.wikipedia.org/wiki/Payment_Card_Interchange_Fee_an...
A part of the settlement that allows merchants to charge fees to customers paying via credit card in order to recoup swipe fees took effect on 27 January 2013. Debit cards and transactions in the ten states that prohibit credit-card surcharges will not be affected. Many large retailers, such as Wal-Mart and Target have opted not to impose surcharges.[6] In the event of a return, surcharges are refunded along with the purchase price of the merchandise.[7] The National Association of Convenience Stores, also known as the NACS, complained that this measure "merely make[s] retailers the collection agents for the banks."[8] The National Retail Federation said, "that card company fees are the problem and the surcharge story is a volume that belongs on the fiction aisles. The real threat to retailers and their customers continues to be price-fixed hidden fees that can only be cured by transparency and competition." [9]
However, the way that gas stations got around the rules at first was they were allowed to offer a "cash discount." So CC price was the "real" price and if you paid with cash you got a discount. Same thing in the end though.
Then there are the effects of having such a thick intermediary, a duopoly. Some consumers can't get a credit card. It's hard for consumers vulnerable to overspending & borrowing to avoid the card's expensive credit component.
There's also a general brokenness (IMO) of the "pull" nature of credit cards. I want to send vendors money, not authorize them to take some themselves while reserving the right to dispute the charge. Even for recurring transactions I would rather an easy bill paying service that works like invoices & checks do, but with a 10X simpler UI.
Massive statement that I sincerely doubt is true (increased revenue off of increased liquidity drives prices down for everyone).
It's controversial that an extra cost attached to every transaction in a big wide chunk of the economy will bring up costs to consumers.
It's not very different to sales tax.
Bitcoin removes overall liquidity, by behaving like cash. The merchant may save 3% on bitcoin transactions, but they will have fewer transactions.
Aren't debit and credit cards 100% interchangeable these days? I've for sure never had my MasterCard debit card rejected.
I tried to order something online with a prepaid debit card once and it was rejected. I then put in my CC and it worked fine.
Disclaimer: My experiences don't necessarily reflect others.
However, consumer protections for a debit card are nowhere near as good. e.g. in the UK at least, if you experience fraud you have to wait for your bank to refund your account, whereas you don't experience any loss with a credit card. As such I avoid using debit unless the merchant charges for credit.
For some purchases, there is MasterCard. For everything else, there's BitCoin.
I take it you've never had your CC details stolen, or less seriously, had your CC automatically shut down when you're traveling due to "suspicious activity."
Neither take more than a few moments on the phone to resolve without the lose of any funds.
No, but I've had fraudulent charges, which required only a phone call to complain, and they were reversed.
I don't want to tap my card and leave. I wish I could turn off that "feature."
A way credit cards are bad for consumers?
Science proves that you tend to spend less money when you pay with cash, especially on unplanned and/or impulse purchases. I guess the psychology of actually handing something over then having less of it afterwards makes people think twice about if they really need to spend the money. Also getting extra cash when you over budget has an extra step (trip to bank/ATM) so you're probably more likely to stay in budget or to rethink if you really need that over budget purchase.
http://www.livescience.com/2849-study-credit-cards-spending....
http://www.investopedia.com/articles/pf/08/pay-in-cash.asp
http://seekingalpha.com/article/20333-guide-to-credit-cards-...
http://business.time.com/2013/08/08/turns-out-you-only-think...
I especially think this is interesting:
>McDonald's found that the average transaction rose from $4.50 to $7 when customers used plastic instead of cash
Then don't. No one forces you. Use signature only, or "chip and pin".
http://www.mymoneycoach.ca/credit_rating/how-to-protect-self...
"a $3 smart card reader purchased online can steal people’s credit card information if the thief can get close enough to your purse or wallet.
I know you're thinking "you're not liable for fraud." Doesn't mean I want fraud to happen, that it isn't a pain in the ass.
Especially unsettling is the RFID chips in passports.
http://www.washingtonpost.com/wp-dyn/content/article/2006/09...
http://www.emc.com/emc-plus/rsa-labs/staff-associates/epc-rf...
I did this accidentally and have been using my phone with chip and pin for about a year.
Personally I'd prefer to swipe.
I am not sure what is exactly that awful in having free credit for X days, rewards for making purchases (which effectively cancels fees) and, the most important thing, chargebacks.
I can understand Credit Card issues from seller point of view, but for clients (that is most of us), they are not that bad.
Bitcoin will have to provide the same level of consumer comfort and safety to have wider adoption.
This also touches banking system as a whole. If I make an error in my bank transfer, I will get my money back and this is up to bank to return them, I don't have to worry about this. Who will give me back my bitcoin payment done by mistake?
Chargebacks are awful. 99% of the time, the merchant is a trusted party with a reputation to uphold, and the customer is a nobody who either couldn't care less about or couldn't be held to their reputation. Established companies won't go around overtly scamming people. The only time that chargebacks are really a good thing is with the very uncommon untrusted-merchant sale (like a new seller on Ebay with little/no feedback).
Chargebacks themselves are a necessary part of the trust infrastructure you talk about. Not just for new merchants, they keep the established ones honest too.
I think I know what you mean by that statement, but I want to make claer that Bitcoin (the protocol) should never provide this. This is like wanting to build guarantee-of-delivery into the IP protocol. It's completely unnecessary and counter-productive.
We want to preserve the ability to send funds to people where chargebacks aren't required, just as we want to be able to send data to people where guarantee-of-delivery isn't required.
Stripe, BitPay, Coinbase, PayPal etc. should be the ones who choose to provide chargeback services.
My CC got hacked twice on the internet, every time I got my money back., it took 90 days but ultimately was credited. Can I expect it from Bitcoin?
Anyway 99.9% people do not have bitcoins to spend. I like it, however it is far from becoming a mainstream payment method., and perhaps never will sadly.
1. Consumer protections are not a Credit Card thing - chargebacks and literally every single protection CC's give you are legally mandated by Regulation E - all payment processors must have them in place. It's unclear how this will relate to BTC, but other solutions (including my own) have this to the letter the same way CC's do. CC's want you to believe it's them, it's not - the US Government made those regulations.
2. Yes Billing and Shipping Address are needed in every instance - but there are better ways than typing them out, especially on a mobile phone. Sure there are services that can save that info for you, but a better solution is a network that already knows that info. Stripe could build that with their "remember me" features, I've built that by using the information your bank has. There are solutions, and we need them to move into mobile commerce where it's impossible for every app to have your info pre-saved. In a world outside the browser, we need better options.
The only thing stopping this from happening today is illiquidity of the BTC<>(insert fiat currency) market. Once we see more liquidity, this dream can become a reality.
How do you think merchants are paid by VISA? Through wire transfers. Are wire transfers reversible? Nope. Yet VISA is a reversible payment system built on top of bank-to-bank wire transfers. Customers deposit funds into their bank account, they get a credit card tied to this account, they pay a merchant with this credit card, the merchant receives the money into their bank account.
Just because the lowest layer is not reversible, does not mean reversibility cannot be built on top. In fact, it's preferable that the lowest layer be irreversible, because irreversibility cannot be built on top of a reversible system.
Bitcoin is the IP Protocol of payment protocols. I'm sure that companies are busy building the TCP/IP protocl of payment protocols on top of Bitcoin right now.
But it might mean it's not a great consumer payments product on its own, which is what the BTC crowd are cheerleading for, incessantly.
I used Stripe for several months, but then they said my business is "too high a risk" for them, 7 years in business (longer than Stripe), hosting company in Ireland, very low charge-back rate, all customers more than happy, good support etc!
Since then opened a merchant account with Elavon after referal from our bank for credit cards and started using Bitpay for bitcoin, not only have lower fees (0% in case of Bitpay + 30$ a month for professional account), but also registered with Mastercard 3D Secure and Verified by Visa, which Stripe doesn't offer either.
I'm so glad they integrated bitcoin, which I think will be a really good contribution to make btc spread amongst normal users.
That's great to see them becoming more of a payment processor versus the simple credit card processor they were.
I love stripe, I love btc, and seeing them together is just really cool and a big step for both.
There are some things to be skeptical about, but the IRS hasn't made Stripe's use of Bitcoin any harder. They have to keep super-careful records anyway.
[Edit: Fixed bad grammar]
Now, under one provider, we can easily accept CC and BTC. This is great news for consumers because it means coinbase and stripe are now in head-to-head competition. These are both well funded startups with great usability. Bring on the feature war and lower transaction fees!
This is most exciting because this will enable great micropayment support on stripe, enabling a whole new breed of marketplace. Also, it is now easy to offer paid anonymous consumption of an API. This is a whole new world of opportunity!
But that's all about inflation in the long term. In the short term, the rate of inflation depends on other factors such as the rate of capital moving into the Bitcoin economy and the rate of Bitcoins being lost.
So right now, there's no reason people should hold back on adopting Bitcoin because of its current monetary policy of having a fixed maximum number of coins. It's not like there's a fixed amount of money or time that can be invested in it; there's no reason people like Stripe and merchants can't do their bit at the same time core Bitcoin developers do theirs..
This is not a critical problem (or even a problem at all, depending on whom you ask). This has been argued again and again, and what is always comes down to is that, according to the Keynesians, an inflationary currency is preferable for encouraging economic growth, but the reality is that A) economics is not hard science and B) as long as the inflation/deflation rate isn't extreme, both inflationary and deflationary goods make fine exchange mechanisms.
>supply of the coins need to gradually increase to support the flow of spending.
Why? If adoption increases, the value goes up, and people spend fewer bitcoins for the same thing. Bitcoin is especially good at this because it has a lot of base units.
>They will sell their BT for currency rather buy depreciating goods with them.
This is incorrect. You're arguing the extreme of the effects of deflation. People will buy goods with deflationary assets, because sometimes the expected value of owning a good is higher than the expected value of keeping an equivalent value of the deflationary asset.
The equivalent (and equally incorrect) ad extremum argument against inflation is "With inflationary currencies, no one will bother working, because they know the payoff of their labor will be worth less by the time they get it."
Bitcoin doesn't need to "support a global economy" for it to be useful/successful.
"Right now more half of Bitcoin supply is already own by someone"
Are you saying one entity owns half of all Bitcoins? I've heard the figure of a few percent thrown around, but never half.
Actually it's current inflationary and will be for a while. It's deflationary eventual nature is a long term issue with plenty of time to be addressed; short term, it's inflationary.
My economic activity in that currency would enrich others who have done nothing but havng on to it. Not really an attractive feature.
Any plans for an option to accept fiat and convert to BTC?
If there's some value add here I'd jump on it. Offering ACH has been a significant credibility boost with my (enterprisey) customers.
Also, wow you guys have grown. I remember when your team page had two rows.
(BACS is the UK equivalent of ACH as far as I can tell.)
If so I'd also love stripe support for Direct Debit ... like GoCardless[1]
Direct Debits in the UK are distinct to bank transfers because they're guaranteed by the bank - you can dispute a direct debit and have your bank refund it, but this is considerably harder (if not impossible) to do with ACH.
http://recode.net/2014/03/27/stripe-merchants-will-soon-be-a...
Edit: the reason I think it could be a JTS moment is that I associate "the addition of bitcoin" with "tired marketing stunt performed by irrelevant companies like Overstock". I could be wrong.