Why some 3rd party wallet providers should be avoided..

[Kakmakr]

 A few weeks ago, my friend used a bitcoin payment service provider called ... BitPay. He wanted to pay for a online subscription and the service only accepted bitcoin payments if you used BitPay.

The amount was small ... between $10 to $15 dollars ....so he thought it would not cost him a lot in miners fees. Well, he was wrong... The Fee rate was 123 sat/byte and his miners fees was almost $9 on that transaction of between $10 and $15 ..... that comes down to more than 45% of the total value of the whole transaction.

The service does not allow for you to choose what fee rate you wants to use, it just gives you a popup warning message.. saying that the fee is going to be high.  

     Services and merchants should not force you to use their preferred payment service, because it is chasing customers away.

If he used his own hardware wallet or even Electrum, he could chose what fee rate to use and he would have paid a lot less. I guess it is a hard lesson to learn... right!  

[ranochigo]

Why would the person be forced to use Bitpay? The service wouldn't know if the payment is done via BitPay if it's done on-chain. They have no reason to force the user to use BitPay to pay for an invoice in Bitcoin on-chain, it'll be the same as paying using any other wallets.

I don't think its very unreasonable for the fees to be that high. There was indeed a period of time where it took hours for my transaction with a fee of ~100sat/byte to get confirmed. If the merchant wants a confirmation within a reasonable period of time, I don't think that would be out of the ordinary though I agree it's quite extreme.

If your wallet provider doesn't allow you the liberty to choose the way to use your wallet, you should avoid it.

[Kakmakr]

Why would the person be forced to use Bitpay? The service wouldn't know if the payment is done via BitPay if it's done on-chain. They have no reason to force the user to use BitPay to pay for an invoice in Bitcoin on-chain, it'll be the same as paying using any other wallets.

I don't think its very unreasonable for the fees to be that high. There was indeed a period of time where it took hours for my transaction with a fee of ~100sat/byte to get confirmed. If the merchant wants a confirmation within a reasonable period of time, I don't think that would be out of the ordinary though I agree it's quite extreme.

If your wallet provider doesn't allow you the liberty to choose the way to use your wallet, you should avoid it.

I think it is some regulatory thing for some merchants. A service like BitPay has strict KYC requirements, so the merchant knows he will  not be implicated in dodgy deals, if the bitcoins was derived from criminal actions. They hope the KYC requirements will give them some protection against fraud and money laundering schemes.

It also leave a paper trail for their auditors with proper invoicing etc.. In any way, I will not be using their service.. so I am not to worried about that.

The other reason could also be that inter transfer of coins within a specific wallet provider.... might be cheaper for the merchant. I know some wallet providers do not charge a large fee, if the coins stays in their system. (It is just a ledger entry on their database, not a tx on the Blockchain) 

[OmegaStarScream]

Do you happen to know which service was it? I've already come across some merchants that asked me to login into my BitPay account as you said, but it was possible to continue "as guest" and then use a BIP70 decoder to pay for the invoice (by giving me the address and the amount).

[The Cryptovator]

Why would the person be forced to use Bitpay? The service wouldn't know if the payment is done via BitPay if it's done on-chain. They have no reason to force the user to use BitPay to pay for an invoice in Bitcoin on-chain, it'll be the same as paying using any other wallets.

Most likely the website uses Bitpay API to accept bitcoin. I have experienced before on the Namecheap. Before adding BTCPayserver on the Namecheap they accept only Bitpay. There was no option to send funds from another wallet either its web or noncustodial wallet. You had to send fund Bitpay first if you are holding funds on another wallet. But good to see that now they are accepting bitcoin via BTCPayserver, so there is no issue sending bitcoin from anywhere.

[The Sceptical Chymist]

Why would the person be forced to use Bitpay? The service wouldn't know if the payment is done via BitPay if it's done on-chain. They have no reason to force the user to use BitPay to pay for an invoice in Bitcoin on-chain, it'll be the same as paying using any other wallets.

Yeah, that's weird--usually when I've bought something and the processor is Bitpay they just provide you with an address to send the funds to, and you can send the payment with whatever wallet you want.  Is OP's friend a newbie and missed something, perhaps?

I don't think its very unreasonable for the fees to be that high.

But that isn't the point.  Bitpay shouldn't (or usually hasn't) set the fee for the customer.  I know the network has been really congested as of late and average fees have been extremely high, but OP should have been able to make the payment without using a Bitpay wallet.

[joniboini]

Most likely the website uses Bitpay API to accept bitcoin. I have experienced before on the Namecheap. Before adding BTCPayserver on the Namecheap they accept only Bitpay. There was no option to send funds from another wallet either its web or noncustodial wallet.

That's weird, especially because Bitpay lists multiple wallets that users can use the pay their invoices[1]. Are you sure you're not mistaking it for the payment gateway service that is available to be integrated on your website?

[1] https://support.bitpay.com/hc/en-us/articles/115005701523-Which-wallets-work-best-for-a-BitPay-payment-#:~:text=You%20can%20use%20any%20of,send%20some%20bitcoin%20to%20it.

[hugeblack]

There is another reason for forcing users to pay huge mining fees, which is that they will convert those coins into dollars in the merchant's account, and thus the currencies must be confirmed quickly to avoid fluctuations in the exchange rate.

Delayed confirmation of transactions is not considered a problem if the trader accepts cryptocurrencies and does not intend to quickly convert them into bank balance or if the exchange rates are stable.

[o_e_l_e_o]

A few weeks ago, my friend used a bitcoin payment service provider called ... BitPay.

BitPay are anti-bitcoin and should be avoided at all costs: https://debitpay.directory/anti-bitcoin/

The service does not allow for you to choose what fee rate you wants to use, it just gives you a popup warning message.. saying that the fee is going to be high.

BitPay have both a wallet and a payment processor. The payment processor will have no control whatsoever over what fee he sets for his transaction, and the wallet will allow him to choose his own fee. If he has overpaid a fee, then he hasn't been paying attention to what he is doing.

Yeah, that's weird--usually when I've bought something and the processor is Bitpay they just provide you with an address to send the funds to, and you can send the payment with whatever wallet you want.

Sometimes they show an invoice link which has to be clicked on and opened in a supported wallet, and not all wallets support it. If this is the case, you can use a third party tool such as https://alexk111.github.io/DeBitpay/ to decode the invoice and be shown an address and amount like every other normal transaction. BitPay make things unnecessarily complicated.

[DaveF]

As stated above if the vendor is using BitPay then they do tend to force you to pay a fee that should get you into the next block or two.

Now, here is where it gets wonky so to speak. Merchants that use them to take payments are mostly paid in local fiat. They don't keep the BTC and send it to the merchant, they send the merchant cash. So in that regard BitPay wants to get the funds in the next block, sell it as quickly as possible, take their cut and send the money to the vendor.

This is what their entire setup is based around.
When fees are high, they really don't want to wait for 20 blocks for it to be mined when the price of BTC can change several percentage points.
So they adopted the pay with a supported wallet that lets us determine the fee so we can get our funds quick or go elsewhere.

Not the best attitude, but it works for them.

-Dave

[o_e_l_e_o]

When fees are high, they really don't want to wait for 20 blocks for it to be mined when the price of BTC can change several percentage points.

So here's question I can't answer myself since I flat out refuse to use BitPay or use any merchant which requires me to use BitPay:

They can print an invoice which says "Pay X to address Y using fee Z". I load that invoice, but decide fee Z is far too high, so I change it to pay a fee which is 20% of Z. My transaction now takes 20 blocks to confirm instead of 2.

What do BitPay do in this scenario? Will they cancel my order? Will they calculate a new price and demand I pay the difference?

All in all, yet another reason to convince as many merchants as possible to start using BTCPay instead.

[DaveF]

When fees are high, they really don't want to wait for 20 blocks for it to be mined when the price of BTC can change several percentage points.

So here's question I can't answer myself since I flat out refuse to use BitPay or use any merchant which requires me to use BitPay:

They can print an invoice which says "Pay X to address Y using fee Z". I load that invoice, but decide fee Z is far too high, so I change it to pay a fee which is 20% of Z. My transaction now takes 20 blocks to confirm instead of 2.

What do BitPay do in this scenario? Will they cancel my order? Will they calculate a new price and demand I pay the difference?

All in all, yet another reason to convince as many merchants as possible to start using BTCPay instead.

Depends. I have heard of several different things happening.
If BTC is stable, and it confirms in a few hours then your order goes through.
No matter what happens after "X" amount of time the invoice will time out and you have to go though bitpay for a refund. No idea what "X" is.

If the price of BTC changes past a certain % (once again I don't know what it is) and you did not use their fee you have to go though bitpay for a refund.

Important note: all this is from other people posting about it here / reddit / twitter / other crypto forums.
 
If all I can get is a BIP70 payment request (which by the way some places other then BitPay still use) I either deal with it or see if there is another way of paying. Depending on the fees requested.

I really don't think it's a evil as everyone thinks it is. Businesses want to get paid, their don't care what credit card companies have to go though on the back end to get paid and they don't care what BitPay has to deal with either. All they want to know is when the money is going to hit their bank. For businesses that are keeping money on chain or using it to pay vendors / employees whatever it's a different story. But for many places that are operating on thin margins, it's take your 1.5% cut give me the rest ASAP and go away.

I think that is what people keep forgetting, and it goes back to that thread that you and I were on earlier this year with the BitPay KYC. We need more places to take BTC directly. If there is going to have to be a conversion to fiat to pay rent / gas / electric / insurance / vendors / etc. then places like BitPay / Coinbase Commerce / etc. are always going to exist and they may or may not have shitty (to us) rules.

-Dave

[o_e_l_e_o]

No matter what happens after "X" amount of time the invoice will time out and you have to go though bitpay for a refund. No idea what "X" is.

If the price of BTC changes past a certain % (once again I don't know what it is) and you did not use their fee you have to go though bitpay for a refund.

Is that not a bit of an issue, though? That they are not clear with how fast your transaction must confirm, or how much fluctuation in price they will accept before your payment is declared "invalid". Seems quite disingenuous on their part, since I'm sure if the price of bitcoin increases dramatically after you have placed your order they won't be offering you a refund on the excess you paid.

I really don't think it's a evil as everyone thinks it is.

I don't think that requiring speedy transactions is evil, at all. It's just good business sense, although they should be more open and transparent about their processes as above. It's all the other shady things that BitPay does - supporting Segwit2X, demanding KYC, invading privacy, arbitrarily block payments, etc. - that makes me recommend that they should be avoided.

[DaveF]

No matter what happens after "X" amount of time the invoice will time out and you have to go though bitpay for a refund. No idea what "X" is.

If the price of BTC changes past a certain % (once again I don't know what it is) and you did not use their fee you have to go though bitpay for a refund.

Is that not a bit of an issue, though? That they are not clear with how fast your transaction must confirm, or how much fluctuation in price they will accept before your payment is declared "invalid". Seems quite disingenuous on their part, since I'm sure if the price of bitcoin increases dramatically after you have placed your order they won't be offering you a refund on the excess you paid.

I really don't think it's a evil as everyone thinks it is.

I don't think that requiring speedy transactions is evil, at all. It's just good business sense, although they should be more open and transparent about their processes as above. It's all the other shady things that BitPay does - supporting Segwit2X, demanding KYC, invading privacy, arbitrarily block payments, etc. - that makes me recommend that they should be avoided.

Can't comment on the S2X didn't really follow it, but the KYC, privacy, blocking payments, etc. again go back to the conversation we had before. BitPay has to play by US rules. And it choses to play by some of the most strict ones. I disagree with it, you disagree with it, but at no time can anyone come back to them and say that they violated this or that law.

Same thing with Coinbase. They have stated that they really don't give a crap about BTC that comes from casinos. But, due to regulations they choose to ban all deposits / withdraws to / from them because it just keeps their liability down.

Think of any US based exchange / provider as being less concerned with KYC and more concerned with CYA.
The downside of CYA for them is that it means more KYC for us.

-Dave

[Wind_FURY]

OP, slightly curious, did your friend notice the "recommended coin" that should be used by BitPay? The one with low fees and faster confirmations?

BitPay's business-model wants the customer to go through inefficiencies. Haha.

[o_e_l_e_o]

BitPay has to play by US rules.

Sure, I don't disagree with you there. I fully accept that the government is forcing BitPay to push KYC on its users, although it is worth noting that BitPay put up zero resistance, and go much further and more invasive with their KYC than other payment processors. And also worth noting that BitPay are doing a lot of things they don't have to, such as cooperating with Chainalysis.

Still, my underlying feeling about the whole thing hasn't changed. The entire point of bitcoin is to be able to make transactions without intermediaries, without "trusted" third parties (I trust BitPay about as much as I trust Roger Ver). Why are we, as a community, allowing a company like BitPay to insert themselves in to all our transactions, to collect our data, to spy on us, to report us to the government, and take a cut for the privilege? The only person who needs to know what I am spending my money on is the person I am buying from at that specific moment. BitPay is on a path to make bitcoin transactions less private than fiat.

Bitcoin is unique in that you can easily and completely cut out these middle men. Merchants should be encouraged to use a self hosted platform such as BTCPay instead, and we should support merchants who do by preferentially spending our money with them.

[dkbit98]

If he used his own hardware wallet or even Electrum, he could chose what fee rate to use and he would have paid a lot less.

That is true but I doubt many people are using manual fee option for Electrum and other wallets, and I don't know why, but I think they are afraid of messing something up and getting stuck transaction.

I trust BitPay about as much as I trust Roger Ver

I wonder why you don't trust that convict? 

[bob123]

Why are we, as a community, allowing a company like BitPay to insert themselves in to all our transactions, to collect our data, to spy on us, to report us to the government, and take a cut for the privilege?

Such companies will exist as long as people are going to use and support them.

I am not using BitPay and will never be.
Everyone is free to decide how he handles a payment. If someone chooses to use BitPay to give aways his data, i couldn't care less. That's not my business.
You can't force other people to be privacy-orientated or non-retarded or whatever. If they decide to giveaway their data (hello facebook, tiktok, etc..), they are free to do so.

[o_e_l_e_o]

Everyone is free to decide how he handles a payment. If someone chooses to use BitPay to give aways his data, i couldn't care less. That's not my business.
You can't force other people to be privacy-orientated or non-retarded or whatever. If they decide to giveaway their data (hello facebook, tiktok, etc..), they are free to do so.

Sure, people are free to compromise their privacy. We can advise against it, tell them why it's a bad idea, provide examples of the negative consequences, offer alternatives, and so on, but ultimately we can't stop them if thry choose to ignore all that.

However, bitcoin is different. If someone gives away their personal details to Facebook or Google, it doesn't affect me at all. I don't use these platforms. But if the community decide to keep supporting companies like BitPay, allowing them to grow bigger, allowing them to exert more control over the marketplace or over bitcoin itself (see the Segwit2X attack for example), then that absolutely affects me.

If the community as a whole decides it is fine with a third party monitoring all our transactions, demanding KYC, blacklisting users it doesn't like, freezing payments it doesn't like, and charging a fee from us to do this, then we really are no better than fiat.

[FinneysTrueVision]

You don't have to use the fee rate they give you. When you are going to send payment they ask you which wallet you are using. I usually tell them I'm using Bitcoin Core and they don't force me to use their payment protocol which is forced upon you if you have a BIP70 compatible wallet. Bitcoin Core deprecated this protocol so BitPay will give you an address and amount instead of having you click a payment URL which will open your wallet and select the fee for you.