As I've posted recently in other topics I'm working on a payment system and am currently using Bitcoin as the value carrier.
I've been trying to keep everything on-chain while providing a whole range of transaction initiators (smart cards, RFID, mobile app, web, QR, biometric, you name it
) and also speed up the confirmation times in a similar way to Visa. Post will be coming soon with more details
The issue is network fees for small transactions that could end up meaning that when added to the service fee (1-2%), the merchant gets (may as well be) nothing.
I don't want to be a Paypal for Bitcoin by taking payments and just moving balances around in the database until someone wants to withdraw, but with current and possible future high fees for smaller transactions, it may be the only option for some transactions.
I'm asking the community as a whole, if you were considering trying out such a service, would the fact that transactions may not happen on the chain, but just be a number in a database be an issue for you? It would likely be an automated calculation that if the service fees plus network fees are more than x% of the transaction then it is processed internally only.
This would only apply to transactions made at a payment terminal or other merchant device, and the service fees are on the merchant side not the user. Straight user to user transactions would only incur the network fees, same as regular banking really. Free unless making money from the service, and even then I want to make it dirt cheap.