Bitcoin Credit Cards: How to create a POS device?

[alir]

The problem with the ideology of wanting total independence from the banks is that without them, you don't get any customers either - Yes, you could bring your own hardware, but its just too much for a retailer to worry about.  To get the service into the shop, you must go through the payment gateway company who are already there.  Don't worry there are a few of them, unfortunately, they are mostly banks or closely connected with them.

Thank you, this is exactly what I have been saying. We don't have to restructure society altogether. Some things work well, like carrying around a plastic card instead of something with "real" value that can be lost or stolen.

Tipped +.002 btc

[nwbitcoin]

The problem with the ideology of wanting total independence from the banks is that without them, you don't get any customers either - Yes, you could bring your own hardware, but its just too much for a retailer to worry about.  To get the service into the shop, you must go through the payment gateway company who are already there.  Don't worry there are a few of them, unfortunately, they are mostly banks or closely connected with them.

Thank you, this is exactly what I have been saying. We don't have to restructure society altogether. Some things work well, like carrying around a plastic card instead of something with "real" value that can be lost or stolen.


Tipped +.002 btc

Thanks

[gendal]

The problem with the ideology of wanting total independence from the banks is that without them, you don't get any customers either - Yes, you could bring your own hardware, but its just too much for a retailer to worry about.  To get the service into the shop, you must go through the payment gateway company who are already there.  Don't worry there are a few of them, unfortunately, they are mostly banks or closely connected with them.

Thank you, this is exactly what I have been saying. We don't have to restructure society altogether. Some things work well, like carrying around a plastic card instead of something with "real" value that can be lost or stolen.

Tipped +.002 btc

Exactly. If/when bitcoin (or a successor) takes off big-time it will be enabled by a network of complementary services. The idea that the average retail customer will interact directly with the core bitcoin network, with the associated pain of wallet management, transaction absolute finality (ie no chargeback, aka consumer protections) and the rest, strikes me as ludicrous. In time, it will come to be seen as "just another currency", adopted because of its primary benefit of predictable money-supply growth. The bitcoin network will be the currency's (near)RTGS. The world's financial plumbing system (visa, CLS, SWIFT, whatever) will require little more than trivial tweaks to support it (primarily, links to the bitcoin core network for gross settlement transactions). If this prediction is true then the world's POS devices can already support bitcoin with next-to-no effort.

[nwbitcoin]

Looking at this practically, lets say you have a plastic debit card which links to an online wallet.

Load up your debit card from your local fiat currency, and pay your bills in bitcoins (or alt coins) and you only have to swap back to fiat when you want to (and get charged for the pleasure).

The retailer can choose to get paid into a bitcoin account, or into a their standard payment gateway account.

The next stage of the bitcoin story is that the public need to know why they would want it.

To me, the advantages of bitcoin to the public are that its inflation proof and it can be used internationally both in person or online without having to worry about forex charges.

That would tend to suggest that the natural market for bitcoin to start with are business people with international companies.  Therefore, if you want to get to them, how about creating a debit card for expense accounts?

Think of it like an AmEx card - exclusive and desirable, with real benefits that financially astute people understand. Get them to buy into using such a card, and slowly, bitcoins will work its way down the food chain to Wall Mart!

Maybe the trick is to talk to a card provider who deal with these types of clients?

[alir]

Trying to make deals with the current payment processors, and convince them to reprogram devices to accept Bitcoin would be an incredibly wasteful and expensive undertaking. More headaches then necessary and the whole point is to break away from the current system.

Thankfully credit and debit card terminals are a very simple technology, it would not be difficult to produce a more cost efficient device geared towards Bitcoin. The only problem is getting merchants to adapt it like you said. There needs to be a reason why they personally would want to accept and hold bitcoin before you convince them to invest in a bitcoin terminal.

If they'll be going through the hassle of converting back to fiat anyways, why bother.

[yokosan]

Trying to make deals with the current payment processors, and convince them to reprogram devices to accept Bitcoin would be an incredibly wasteful and expensive undertaking. More headaches then necessary and the whole point is to break away from the current system.

Thankfully credit and debit card terminals are a very simple technology, it would not be difficult to produce a more cost efficient device geared towards Bitcoin. The only problem is getting merchants to adapt it like you said. There needs to be a reason why they personally would want to accept and hold bitcoin before you convince them to invest in a bitcoin terminal.

If they'll be going through the hassle of converting back to fiat anyways, why bother.

What about doing it in stages? For example a MtGox card that throws cashback into your MtGox account.

[BitcoinINV]

Thats why our system give the merchant the option at the time of taking LTC, USD or BTC.

[alir]

Thats why our system give the merchant the option at the time of taking LTC, USD or BTC.

The system could focus on accepting BTC, but the payment processor would offer to buy those bitcoin from the merchant immediately. The only addition would be logging the exchange price for each transaction to properly reimburse the merchant at the end of the day/payment cycle.

[midnightlightning]

Our software allows us to issue and accept "cards" The card can be used for whatever currency you have in your account we currently will be supporting USD, BTC and LTC.
http://www.youtube.com/watch?v=QyK9kdEgxCA&feature=youtu.be

Just use a plastic card with a credit card style number on it, and a pin

Having a card with some number other than the private key on it is a possibility, and would work well with the existing credit card financial market, but the downside is the centralization. In order to get a "bitcoin credit card" in that case, I have to open an account with the BitcoinInv or whoever is offering the service. That central authority now has my wallet file, and I have to transfer funds to my account there. Then, the situation is like I described; I only need to bring my card with my BitcoinInv account number on it with me to the store, and use their POS system to make the purchase from my account. However, that centralization now means BitcoinInv becomes a honeypot for thieves. If someone can get in and crack whatever security is behind all the wallet files there, they can walk away with funds from (potentially) anyone who has an account there (depending on the security measures in place).

Having the private key on the card itself, and if the POS system were independently-verifiable to not keep those private keys after being used, there's no central location for a thief to hit to steal all the customer's money.

So, yes, I'd like to see something like the process you're working on come to be, BitcoinInv, but in order to make it work, whatever agency becomes that central point needs to be big enough to be the central processing point, have the servers be reliable enough to handle lots of load, and have ironclad security. That, I believe, is a bigger hurdle than reprogramming a POS card scanner to understand the account number coming in isn't a credit-card-style number of five groups of four numbers, but a string of hex or base-58 characters, no?

If/when bitcoin (or a successor) takes off big-time it will be enabled by a network of complementary services. The idea that the average retail customer will interact directly with the core bitcoin network, with the associated pain of wallet management, transaction absolute finality (ie no chargeback, aka consumer protections) and the rest, strikes me as ludicrous. In time, it will come to be seen as "just another currency", adopted because of its primary benefit of predictable money-supply growth. The bitcoin network will be the currency's (near)RTGS. The world's financial plumbing system (visa, CLS, SWIFT, whatever) will require little more than trivial tweaks to support it (primarily, links to the bitcoin core network for gross settlement transactions). If this prediction is true then the world's POS devices can already support bitcoin with next-to-no effort.

I agree! The issue, however, is the "If/when". Currently the credit-card infrastructure has assurances like the FDIC and whatnot that make me the consumer feel okay handing my credit card to a waiter to go do something a back room with (presumably charge me for my dinner and nothing more). Getting to that point is a great long-term goal, but to start with, but there's no one big enough yet to be the strong arm that cracks down on Bitcoin fraud and insures other central processors if they get robbed. So the power needs to stay with the consumers; I'd just like to see it make the step away from owning a smartphone to be the barrier to entry in the day-to-day transactions with Bitcoin.

Until the day that there's an agency that insures other central bitcoin processors against theft, I won't be keeping any large amounts of coins in online accounts such as the one you're describing, BitcoinInv. But still keeping pocket change there for day-to-day expenses would be quite convenient, and I would take advantage of that.

[MarlboroMan]

Plastic cards are fine for me.

[gendal]

If/when bitcoin (or a successor) takes off big-time it will be enabled by a network of complementary services. The idea that the average retail customer will interact directly with the core bitcoin network, with the associated pain of wallet management, transaction absolute finality (ie no chargeback, aka consumer protections) and the rest, strikes me as ludicrous. In time, it will come to be seen as "just another currency", adopted because of its primary benefit of predictable money-supply growth. The bitcoin network will be the currency's (near)RTGS. The world's financial plumbing system (visa, CLS, SWIFT, whatever) will require little more than trivial tweaks to support it (primarily, links to the bitcoin core network for gross settlement transactions). If this prediction is true then the world's POS devices can already support bitcoin with next-to-no effort.

I agree! The issue, however, is the "If/when". Currently the credit-card infrastructure has assurances like the FDIC and whatnot that make me the consumer feel okay handing my credit card to a waiter to go do something a back room with (presumably charge me for my dinner and nothing more). Getting to that point is a great long-term goal, but to start with, but there's no one big enough yet to be the strong arm that cracks down on Bitcoin fraud and insures other central processors if they get robbed. So the power needs to stay with the consumers; I'd just like to see it make the step away from owning a smartphone to be the barrier to entry in the day-to-day transactions with Bitcoin.

But why do the POS terminals need to change to support this?

Today, I can take a credit card that understands only GBP to Spain and purchase an item denominated in Euros from a shop.  I need to look-up where in the network the conversion from EUR to GBP takes place, but I can guarantee it's not in the POS device or at the retailer.   I'm pretty sure it's done at the issuer end, or at worst, by the switch.

The point is: this means that to support Bitcoin today, the only part of the *existing* infrastructure that would need to change would be between the switch and an issuer, in the worst case... and that would just be limited to adding support for an additional currency code.

The risk management could be entirely the purview of the issuer.

I guess my underlying point is: nobody expects retailers to accept more than one (or perhaps) two currencies today - why would we expect them to accept another one in the future?  Sure - a Bitcoin-only subeconomy would be interesting, but is it realistic?

[midnightlightning]

But why do the POS terminals need to change to support this?

...the only part of the *existing* infrastructure that would need to change would be ... adding support for an additional currency code.

If Bitcoin was recognized as a currency, and major banks/credit card vendors accepted it as just another currency that could be converted to, yes, that would allow existing credit cards to be used as they normally are. However, that also strips Bitcoin of its decentralization, and its anonymity (Ever think a big bank will let you open a BTC-only account with no ID?).

Nobody expects retailers to accept more than one (or perhaps) two currencies today - why would we expect them to accept another one in the future?

Right now, Bitcoin isn't recognized as a currency. As it is, it could be compared to various "rewards points" programs retailers have. Retailers may only accept a few currencies, but the number of types of plastic cards they can scan is many, for many purposes (paying for the purchase, adding rewards points, adding coupons, etc.). The "rewards points" accounts are more local than an international currency exchange, and I believe would therefore require less infrastructure to be built. While we're waiting for Visa itself to recognize Bitcoin as a currency, a smaller stepping stone could be to do it in a less-centralized way, as I'm suggesting.

[alir]

Midnightlighting, just the same as you would never walk around with your bankroll in your wallet, there's no logical reason to store anything more than a few days worth of spending in a bank account to fund a debit card.

At the current value of a single bitcoin, there's little reason you should need to store more than a few in your bitcoin card's "hot wallet". You'll never be at risk of losing more than that and assuming a free service does arise, there could be optional fees to insure your deposits against theft.

If you're foolish enough to store your wealth someplace you're not personally in complete control over, well you're asking for an expensive lesson.

[midnightlightning]

Right; with the current system, or any sort of "bitcoin debit card", that would be the case. And true of any gift card you have in the current banking system outside bitcoin; you wouldn't want to have a $5,000 Wal-Mart gift card in your pocket for the same security reasons.

[midnightlightning]

Looks like someone with experience with the POS/credit system back-end has an idea: http://www.reddit.com/r/Bitcoin/comments/1ay1ew/bringing_bitcoin_to_brick_and_mortar_ie_the_debit/

[whitenight639]

The problem is this is where ideology meets technicallity,

I like the idea of having a bitcoin card or payment / app on a phone, but I do not like the centralisation and loss of anonyimity that goes with it,

Also I think merchants should accept more than one currency, competing currencies only bring prosperity and options to the users. I would like to think that if a merchant accepts my bitcoin cards they would like to use / hold the Btc and not have there EPOS convert it straight to fiat but I suppose that's there choice.


Just been thinking about it and I think its possible to implement a solution that would have the option of using both Cards with existing EPOS technologies and a phone app, both the merchant and customer would have to make use of online wallets but this presents its own disadvantages.

It would be ideal if their was an out of the box software solution that can be installed on any webserver by any n00b that would have a listening API say over https and it interfaced with the bitcoind, so it listened for merchants requesting payments that originated from its assigned customer(s), (so it could be a personal payment processor just for you or it could be for a group of people), the webserver API would respond with a challenge request for a pin number or password then it would send funds to the appropriate merchand webserver API / address,

If somehow you could make this software so that it could be tamper proof it would not have to rely on the blockchain and could verify transactions with the blockchain in its own time, the customer and merchant web based software could trust each other and know that it is not initiating double spends and what not.


Or we should just switch to litecoin and use its daemon and blockchain directly, as the faster confirm times make it more feasable.

I think I'm reinventing the wheel, Think its time for sleep.





 

[midnightlightning]

I like the idea of having a bitcoin card or payment / app on a phone, but I do not like the centralisation and loss of anonyimity that goes with it,

It would be ideal if their was an out of the box software solution that can be installed on any webserver by any n00b that would have a listening API say over https and it interfaced with the bitcoind, so it listened for merchants requesting payments that originated from its assigned customer(s), (so it could be a personal payment processor just for you or it could be for a group of people), the webserver API would respond with a challenge request for a pin number or password then it would send funds to the appropriate merchand webserver API / address,

That's sounding close to what BitcoinINV posted that they were working on: http://youtu.be/QyK9kdEgxCA.

If "any webserver" could get this software installed on it, then in theory every merchant has their own instance, which allows for decentralization, right? I've been suggesting modifying the POS devices, since they already have to be internet-connected (to process the credit card transactions), and most merchants already have one. For a merchant that's changing over to using an iPad for checkout (like Square encourages), or smaller mobile device (like Apple stores do), just having some webserver out there able to be contacted by those check-out devices would work swell.

[BitcoinINV]

I was thinking about buying a NFC writer and some tags and seeing if I could make some magic happen. How hard is it to program them things?

[midnightlightning]

I was thinking about buying a NFC writer and some tags and seeing if I could make some magic happen. How hard is it to program them things?

Encoding an NFC tag? Not too hard; I believe there's standard libraries for doing so in most languages. I've played with several NFC apps on my phone, most of which give you the ability to write content to a tag, so it can't be that hard. The basic NFC tags hold 144 bytes of data, which would be enough for an account number at least. There are (slightly) more expensive ones that hold 1,000 bytes, if more space is needed to hold an encrypted account value or more data.

[alir]

Looks like someone with experience with the POS/credit system back-end has an idea: http://www.reddit.com/r/Bitcoin/comments/1ay1ew/bringing_bitcoin_to_brick_and_mortar_ie_the_debit/

From what I have gathered he doesn't posses any technical skill to create the service.

Ideas are a dime a dozen, I'm sure you've heard.