I used to run the service sms2btc.co.uk. It was however discontinued due to too high possibility of fraud.
Search the forum for sms2btc.co.uk to learn more.
If you run a internet/gaming cafe, why don't you offer bitcoins for sale there ?
For example, you make a system where you have say 50 BTC in a hot wallet, and you create a system on your machines where you instantly deliver a private key to the target machine, thus making the btc instantly acessible by that machine user.
The problems with SMS paying for btc are many:
1. Payment is reversible. If the user of the phone uses a stolen phone, or loaded credits with a stolen credit card, then the operators will reverse the charges, and the bitcoin supplier will be out of bitcoins, and not receiving any fiat.
2. The middle-men takes their fair share of cuts. This adds considerable surcharge to the coins, which means it is at no way competitive in comparison to using an exchange or a p2p trade. The fees are often exhorbiant, and the operator of the sms to btc system will often need to add a security buffer to avoid fraud.
3. Payments can be reversed months into the future.
Now, who would desire purchase BTC over SMS ? What I can think of are persons who just need a little amount, to dabble into some gaming or just want to get a taste for BTC. So, if for instance one plays in an internet cafe, and just wants to have some fun, I think most players wouldn't care much if they used 10 punds instead of 5 punds for their gaming pleasure. However, if it's a habbit of their, they will really waste a lot of money paying with SMS in the long run.
Even if you cut it down to the very bone, and assuming no fraud, you would still need to take at least a 30% surcharge, just to cover the operating fees. And I assume you would like to make some money off offering this service ?
Now - I don't know how many customers you have at your internet cafe, but one way I would think it would be possible to run a SMS to BTC gateway would be to work as hard as possible for the sake of reducing fraud.
A plus is that any visitor would have to show themselves in the flesh, meaning that if you have security cams, you can track down rogue individual and report them to the proper authorities. Also, anyone wishing to use this feature, should go to the front desk and present ID. Then front clerk should then check the ID against how the person looks. Then the phone number of the user could be entered into the admin interface, and giving the user a certain amount of possible purchases for that day. The phone the user uses could be stolen, and the ID could be fake, but as we're not talking about large amounts of money here, not too many people would risk showing up in person and scam for such petty amounts. Every cafe users should be registered in the admin interface with their full name and their phone number, and they should not be allowed to add more than 2 phone numbers (at most). Also there could be limits as to how much they would be able to spend pr. day, pr. week or pr. month.
If there's real demand to justify implementing such a system for your cafe, and by that I mean at least 10-30 customers pr. day using this feature, then you might look into creating the system that I depicted above. The service would however only be available to customers on location, and the rules would have to be laid out clearly to avoid cheating. For instance it would be possible only to have the service work in your internet cafe, so they couldn't buy BTC with SMS once they got home.
Having to show ID and their person in meatspace, and having certain restrictions on spenditure (yet allowing most people to have the fun they want) would make for a more secure service with less fraud. But this also means that the clerks in the Internet Cafe would need to be vigilant. If they start just entering in and allowing phone numbers without verifying ID, scammers will eventually come in, get BTC with phone credits loaded from stolen CC's or stolen phones and cause a loss for your service. I don't know if you also would be able to verify against the phonebook that the cell phone owners actually have their phones registered to the same name as their ID show.
Rules must be strict, and exercised equally for everyone. Clerks must be stern enough to withstand any pressure from visitors and gamers that wants to have their limits lifted prematurely. Another option would be to sell BTC for cash or debitcard directly at the front desk. If someone points to the fact that they want more BTC for their SMS'es, you can point to that there is a possibility for getting it with cash, but sadly they've currently exceeded their limit in regards to purchase over SMS.
The Internet Cafe could also decide what risk profile they would want to put on each user. If it is a user that the owners/clerks trust, they could give that person higher limits for example.
As it happens, I have software that is made to be integrated with a premium SMS provider in the UK. This system could be altered to accomodate the needs of your operations. However, there would be needed to make a specification to what additions would be needed in the system for your special needs.
The way the current software works that I have programmed is this:
1. User visits the website and enters which package he wants (typically 5-10 punds), user then gets a page with instructions and has to enter his phone number, or text a certain message to a service number, and then just following the instructions. 2. Usually it means the user will receive a code on his phone, and he then has to enter this on the webpage.
3. When this is done, the user is charged the cost of the SMS and receives the BTC.
Depending on what services your users intend to spend the bitcoins on, it would be possible to speed up the delivery process. For instance, if you're running nodes on your client machines, it would be possible to distribute a private key holding the funds to these machines, and thus making the BTC spendable immediately. Most of the time, the purchaser needs to wait 3-6 confirmations before the coins can be spent, and that can take anything from 15 to 60 mins or more.
Another way to do it would simply be to program a web-interface working on the intranet of the internet cafe, and after doing the payment procedure, the user will simply get access to spend a certain amount from your main bitcoin-node. Let's say you have an IT-operator running the main bitcoin-node, and after a user have purchased bitcoins for say 10 punds, the successful purchase message is relayed to the main bitcoin-node and a certain webpage is made available to the purchaser from where he will be able to spend the bitcoins immediately.
So, in reality how it would work for your users would then be like this:
1. User enters the cafe.
2. User sits down at the machine and after a few minutes figures he needs some bitcoins.
3. User leaves the machine and goes to the front desk and say he wants to be registered for the SMS2BTC service.
4. Clerk checks the ID of the user, and does any other checks if necessary (like verifying that the phone number belongs to the guest standing in front of him).
5. The Clerk enters the real name and the phone number of the user in he admin interface of the SMS2BTC system.
6. The Clerk sets the limit of the user, could be a daily, weekly or monthly limit
7. The clerk now tells the user that he can go to
http://www.SMS2BTC.co.uk (or whatever other url you chose to use for the service) to start using the service.
8. The user is happy and goes to his computer and follows the instructions.
9. User get's access to spend his designed coins on the system and everything is good.
On subsequent visits, when a user is already registered, he doesn't need to go to the front desk to query about using the service. Since SMS2BTC service only is available while being physical present in the internet cafe (limited access to the ip-adresses of the internet cafe and pre-registering the allowed cell phones that are able to buy coins), for the second or 3rd visit and visits after that, the user just sits down and uses his phone to get the required BTC's. The only time there will be a problem is if the user runs out of credits. Then he needs to go to the front desk, and the clerk will determine whether he is eligble to have his limits raised or not. Here it is the decision of the clerks that decides if they should raise the limit or not, for a completely new user, there's always a risk factor, whereas increasing the limit for a long time customer is not that much of a big deal.
This system would also need to be maintained, ie. server maintenance, and refilling of bitcoins etc. And thus, one would need a certain level of technical expertise. Security is also one aspect that would need to be considered. Using both a hot and a cold wallet could be desirable for instance. Let's say that on a typical evening that 50 BTC is purchased, then at any point in time, no more than 10% of that should reside in the hot wallet, so if it so happens that the server is broken into and coins are stolen, then only 10% would be gone, and then of course the service would be shut down temporarily for investigations. The remaining 90% funds would be safe though. I can imagine a system where the clerk in action needs to manually verify every time a refill is needed. So, let's say that the clerk is notified that the hot wallet needs to be refilled, the clerk then checks the monitor for the latest activity, and if everything looks fine, then the hot wallet is refilled. This would also be possible to make completely automated, or semi automated as described, it depends on the risk profile you are willing to take on.
Now - if this system proved to be something that actually became popular, then it could be leased or sold to other internet cafees as well.
I stress that the fraud risk would be entirely on your company (that's why you need to exercise caution in regards to your risk profile), and that I would be willing to help with the technical implementation, and the continued operation of the service if desired.
I'm also from Norway, so it would be quite possible to go over to England to supervise usage of such a system and to train clerks in using it.
Get in touch if this is interesting, and we will take it from there, then I would be able to let you know more about my qualifications, experience and so on. I also have a person in the UK who did testing for me when I implemented the original service, which could vouch for it's legitimacy.
