Bitcoin Credit Cards: How to create a POS device?

[gendal]

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.

I must admit that I'm still struggling to understand the use case.

Life is complex enough for merchants as it is... the idea of implementing a parallel infrastructure for BTC, with its own idiosyncracies, qualities of service, staff training needs, consumer education, etc., strikes me as entirely unrealistic.

As discussed above, consumers already have the ability to *spend* using any currency they like (a GBP credit card works just fine for EUR purchases in Europe) so allowing consumers to *spend* using BTC would just require an issuer to support it and, perhaps for teh Visa/MC network to add support.   This is clearly feasible:  the Euro's introduction showed new currencies could be added and we can be sure the banks/networks have planned for its disintegration and the introduction of multiple successor currencies.

From a security/safety perspective, a BTC credit card would not have to be linked to anybody's wallet.... the user just needs to settle once a month using the BTC network or via an intermediary.  Similarly, a BTC debit card would just need to be linked to a wallet with a modest balance.

Now, somebody mentioned above that merchants might also want to *accept* BTCs, to avoid conversion to/from existing currencies.  I think that, too, is possible using the existing infrastructure... some merchants in tourist areas already allow consumers to select in which currency they pay (with the exchange rate often being unfavourable but that's another issue).  Now this may well require changes to POS devices... but an update to an existing system is easier to consume and easier for staff to understand than introduction of an entirely new parallel infrastructure.

So... given that adding full support for BTC to the existing payments infrastructure is achievable without too much technical effort, it strikes me that effort would be best spent overcoming the non-technical objections/blockers, rather than investing effort reinventing technical solutions that don't seem to be needed.... am I missing something?    Is the main problem that people don't like the fees imposed by Visa/MC?   Dislike of the idea of an intermediary? (i.e. a vision that all BTC users in the future will transact directly across the Blockchain?) Something else?

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[BitcoinINV]

It would just need a number on it, when the person waves it in front of the reader it just fills in the blank for the card #. The pin would have to be inserted manually by the customer. I do not think my phone reads writes NFC stupid evo

[midnightlightning]

I must admit that I'm still struggling to understand the use case.

so allowing consumers to *spend* using BTC would just require an issuer to support it and, perhaps for teh Visa/MC network to add support.

My suggestion is that getting an issuer (like Visa/MC) to accept BTC as a currency is a monumental task that won't happen soon. And that solution centralizes the otherwise decentralized Bitcoin economy by funneling through the issuer (who can make whatever claims it wants to break down anonymity if you want to use that service). Which is why I'm searching for another solution.

[whitenight639]

So... given that adding full support for BTC to the existing payments infrastructure is achievable without too much technical effort, it strikes me that effort would be best spent overcoming the non-technical objections/blockers, rather than investing effort reinventing technical solutions that don't seem to be needed.... am I missing something?    Is the main problem that people don't like the fees imposed by Visa/MC?   Dislike of the idea of an intermediary? (i.e. a vision that all BTC users in the future will transact directly across the Blockchain?) Something else?

The idea Is that If there is inefficiencies in the system in the form of middlemen then they should be eliminated, I dislike Visa & MC, they between them have a duopoly, they refused to process payments for wikileaks they are not your fiend. We have been given technology that liberates us from centralisation and now everybody wants to know how they pay their taxes or who they can use to store their bitcoins and why can't we use the normal payment systems, This is ridiculous if we do theses things then we might as well give up using bitcoin.

It's not that hard to enable customers to pay merchants in Btc and with a little bit of ingenuity and funding I think a system that makes use of most of the retailers existing EPOS devices could be found with maybe a small device that can be plugged in, if a company selling these devices also does Btc -> Fiat conversion I'm sure they could make enough to make these devices very cheap or even free for merchants. 

[alir]

Is the main problem that people don't like the fees imposed by Visa/MC? Dislike of the idea of an intermediary? (i.e. a vision that all BTC users in the future will transact directly across the Blockchain?) Something else?

I can't speak for everyone, but I think nominal fees are the issue. If you're making a $1000 purchase, there is no reason that a ~2.75% fee (roughly $30) should be taken from the merchant to handle less than 1 kilobyte of data.

Ideally transaction fees would have a hard limit to prevent high charges for larger purchases. Another idea would be to allow merchants to set a fee based on when they prefer their money is deposited to a wallet. The highest fee (ex: 0.5%) would deposit sales into the merchant wallet immediately, with lower fees happening at lesser frequency for those who just don't need the bitcoin available right away.

There's no reason we should be working with VISA or MasterCard when we can make a superior service that they couldn't possibly compete with.

[BitcoinINV]

The way our merchant processing system is set up is to take .25% of every transaction. Here is the catch, you have to sign up for merchant processing via a broker. The broker can charge from .10% to 2% depending on how greedy they are. This makes it easy for us to expand business and put money back in the pockets of some bitcoin users.

Anyone can qualify to be a merchant broker, and we are accepting brokers for when our merchant system launches in the next month.

[whitenight639]

Anyone can qualify to be a merchant broker, and we are accepting brokers for when our merchant system launches in the next month.

What requirements are there to being a merchant broker? Do we need a dedicated server, or a minimum capital?  do merchants take the risk of double spends then? Where can I sign up?

[gendal]

So... given that adding full support for BTC to the existing payments infrastructure is achievable without too much technical effort, it strikes me that effort would be best spent overcoming the non-technical objections/blockers, rather than investing effort reinventing technical solutions that don't seem to be needed.... am I missing something?    Is the main problem that people don't like the fees imposed by Visa/MC?   Dislike of the idea of an intermediary? (i.e. a vision that all BTC users in the future will transact directly across the Blockchain?) Something else?

The idea Is that If there is inefficiencies in the system in the form of middlemen then they should be eliminated, I dislike Visa & MC, they between them have a duopoly, they refused to process payments for wikileaks they are not your fiend. We have been given technology that liberates us from centralisation and now everybody wants to know how they pay their taxes or who they can use to store their bitcoins and why can't we use the normal payment systems, This is ridiculous if we do theses things then we might as well give up using bitcoin.

OK - so there's several things there then, right?

1) Belief/assertion that middlemen are bad.  Not sure I buy this... any system that can bring together two large groups of people (customers and merchants) is going to be valuable --- users of the system get value from the "middleman" service MC/Visa provide... it saves them having to worry about sorting out multilateral links/contracts/relationships, etc.

2) Claim that Visa/MC are anticompetitive / duopolostic.   I think this is probably accurate but also unavoidable... and it's hard to see how to fix it....   the card network business has huge scale efficiencies and network effects... a small number of large players is what you would expect to see.    This makes it really, really hard for small players to operate profitably.  Not sure how to fix it since it's a fundamental property of the market structure from what I can see

3) Ability to refuse some transactions.   This strikes me as a really good argument - they have this power as a result of 1) and 2) and it would strike me as being abusive....   as you suggest, however, it suits law enforcement bodies since it provides them with an easy way to stop transactions they don't like..... I just wonder if this would be enough to enable the creation of an entirely parallel network (especially one that would presumably also benefit from the effects of 1) and 2)!)

[whitenight639]

OK - so there's several things there then, right?

1) Belief/assertion that middlemen are bad.  Not sure I buy this... any system that can bring together two large groups of people (customers and merchants) is going to be valuable --- users of the system get value from the "middleman" service MC/Visa provide... it saves them having to worry about sorting out multilateral links/contracts/relationships, etc.

2) Claim that Visa/MC are anticompetitive / duopolostic.   I think this is probably accurate but also unavoidable... and it's hard to see how to fix it....   the card network business has huge scale efficiencies and network effects... a small number of large players is what you would expect to see.    This makes it really, really hard for small players to operate profitably.  Not sure how to fix it since it's a fundamental property of the market structure from what I can see

3) Ability to refuse some transactions.   This strikes me as a really good argument - they have this power as a result of 1) and 2) and it would strike me as being abusive....   as you suggest, however, it suits law enforcement bodies since it provides them with an easy way to stop transactions they don't like..... I just wonder if this would be enough to enable the creation of an entirely parallel network (especially one that would presumably also benefit from the effects of 1) and 2)!)

I'm not saying middlemen are necessarily bad, It's just that if we have middlemen that add no value then they should be done away with, in the UK we have a bloated service sector with everybody cutting hair or doing book-keeping, nobody is doing real work and this creates poor growth. Anyway MC and Visa add value in the current system because they facilitate customers transactions for money they hold in banks, they have massive overheads and lose vast sums of money to fraud. Now that bitcoin provides individuals with there own personal electronic bank account (in effect) We may not need these services in their current form.

As we are our own bankers we can send money to anybody else with a wallet or client, so the question is: not why do need to get rid of MC and Visa, rather it's: why do we need to keep them? (I'm thinking long term obviously).

The problem we have now with bitcoin is slow Transaction confirmations, even with the appropriate fee and transaction priority confirmations still take minutes, this is no good if you want to pay for fuel in a garage and have to wait around, Maybe MC & Visa types will find a business model in handling payments and taking the risk for the time between confirmations?

[gendal]

Maybe MC & Visa types will find a business model in handling payments and taking the risk for the time between confirmations?

Exactly... that's my theory for how this will play out.

I see two possible future extremes:

1) Everybody has full access to the core Bitcoin network and every transaction is settled on the Blockchain,

2) Aggregators / net settlement providers spring up to provide "concentration" of transactions off-blockchain, with periodic net settlements across the blockchain.  Most "normal" users access the system through one of these entry points.  They may not even "know" their Bitcoin address.


Future 1) implies a need for massive increases in the scalability of the Bitcoin network and perhaps some rearchitecture to prevent the size of the Blockchain ballooning out of control.  It also implies a need for huge investment in retail-customer-friendly tools/technologies to deal with the lack of chargeback/customer protections/"compensation for your own stupid acts" that retail customers get (and expect) from their banks and card providers.     Entirely achievable - but it requires huge efforts along multiple dimensions (Bitcoin network, consumer education, POS infrastructure, etc, etc).    Note: without this, transaction fees will grow to the point that the only viable transactions are large ones in any case (i.e. micropayments would be unaffordable)

Future 2) is far more compatible with the world "as it is" today but dilutes several of the key benefits of Bitcoin (transaction finality, no need to trust a bank, anonymity (for some definition of that word), etc, etc)


My prediction: we'll end up with a hybrid system:  the rigor and strictness of the core Bitcoin network will prove too onerous for the average user and they will trade-off the BTC benefits for the convenience of Visa/MC/a bank/whatever for day-to-day use.  BUT... direct access to the Bitcoin network will provide the opportunity for a few (many?) people directly to store the bulk of their BTC holdings on the blockchain and not via a bank.

So you get the convenience of today's system for day-to-day low-value transactions whilst being able to hold savings/wealth on the chain.

Like I say, just a prediction..... but if true, it has implications for where we should be spending our efforts with respect to technology build-out, etc, etc.

[BitcoinINV]

Anyone can qualify to be a merchant broker, and we are accepting brokers for when our merchant system launches in the next month.

What requirements are there to being a merchant broker? Do we need a dedicated server, or a minimum capital?  do merchants take the risk of double spends then? Where can I sign up?

No requirements, you get paid for the work you put in. The more merchants you sign up the more you make. No server is needed just a Verified account in our system. 0% chance of double spends if the purchase comes from a account inside of our system. If a payment is made to the listed address of course it will take longer to process and will not post to the merchants account from 1-12 hours depending on how fast I or support see's it pending.