My business partner and I were talking about this today, and I wanted your feedback. We're both new to Bitcoin and are getting excited about the possibility of adding Bitcoin support to our ecommerce software as a service (FoxyCart.com). One concern we have: What prevents someone from doing illegal activities through our platform using Bitcoin?
Currently we benefit greatly from the merchant account provider who approves or denies the merchant. If someone wants to user our service, they have to have a live merchant account to collect payment. This helps ensure the users of our system are right inline with our terms of service because of the merchant account provider's approval process.
If we were to support Bitcoin directly or through a service like Bitpay, what protection would we have? What would prevent someone from signing up and selling illegal things on our platform since they are basically anonymous?
Here are some possible solutions I can think of, but please add some of your own as well:
- Charge a premium for stores who want to use Bitcoin payments exclusively and use the extra fees to manually vet and periodically check up on each merchant to ensure everything being sold is legal (this assumes no password-protected areas of their site).
- Do our own identity validation service (much like mtgox) to ensure we have valid identification for the merchant so if there are any illegal activities going on and we get subpoenaed, we can point to a real person.
- Require a signed document or some similar process to ensure our terms of service is understood and will be followed.
- Rely on the checkbox they clicked and hope for the best.
I'm having trouble coming up with more solutions. Addressing these concerns could help bring Bitcoin well beyond the hacker community into mainstream every day life. We want to help with that, but we also have to protect our company and users. At the very least, accepting Bitcoin means a second look at our business insurance and a long talk with our lawyers.
We'd love to hear your thoughts on this.