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Author Topic: Seamless ecommerce sell to credit cards & receive Bitcoin?  (Read 4206 times)
iamback
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February 26, 2015, 01:41:28 AM
 #1

Combine these two:

a) https://blockchain.info/api/api_receive
b) http://www.bitcoininsanity.com/   or   https://www.bitin.co/buy

Therefor I can issue the customer a bitcoin address, which they must MANUALLY copy+paste to purchase some BTC using their credit card (paypal, etc) which is then all automated from that point forward, except the customer must MANUALLY return to the ecommerce site and their payment will be typically be confirmed within Bitcoin's 10 minutes for 1 confirmation. (note they could also pay directly from any BTC they already have, for those rarer customers that do own BTC)

The downside is the user has to copy+paste a BTC address to another website, and then manually navigate back to the ecommerce site and wait 10 - 30 minutes for confirmation.

I did email the following companies to ask if they can setup more seamless integration and am waiting any response but appears they are not responsive:

http://www.bitcoininsanity.com/

https://www.bitin.co/buy

Does any one have a way to accomplish a more seamless integration so that naive customers don't get lost? Ideally what should happen is I use the blockchain.info API to generate a new BTC address and the customer should be automatically redirected to a page where they can pay with a credit card to buy BTC which is sent to that BTC address (the address automatically set for the customer), then after the credit card transaction is initiated (and without waiting for the block chain confirmation and without waiting for the credit card processing company to do all their manual verification, e.g. without waiting for them to complete a request for scan of id or phone callback), the customer should be immediately returned automatically to the ecommerce site, so the ecommerce site knows that customer has initiated the transaction and the ecommerce site will know it is waiting for the blockchain.info API callback after the BTC has been sent and the block chain makes one confirmation.

The point of returning the customer automatically and immediately to the ecommerce site is because many virtual goods are essentially cost-free, so the ecommerce site may choose to deliver the virtual goods immediately (e.g. a online dating site membership or download software subscription) and rescind the virtual good later if confirmation fails. In other words, chargebacks are an acceptable cost in return for the advantage of giving the good customers immediate seamless, automated access.

Without this, Bitcoin will never be widely used for ecommerce!!!

I am so surprised that no one has done this yet!!!

We've got to get millions of new merchants to accept BTC. And millions of new customers to learn that their merchant does. This is how you do it!!! The ecommerce site can also accept direct BTC transfers for those who already have BTC (which is the vast minority right now), so this will drive millions of people into the ecosystem.


What is the advantage over accepting credit cards directly via Paypal or Moneybookers (skrill)? Do you have to ask?! Don't you know about unexpected holdbacks, account freezes, and other bullshit when dealing with those. And also to get paid in BTC and hold balances in BTC. And also because the above method in theory doesn't require the small merchant provide any documentation and KYC/AML charades.


I have an immediate need for such a service. If anyone can provide the service, I will use it and pay you.

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iamback
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February 26, 2015, 01:50:59 AM
 #2

JUST DO IT!

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February 26, 2015, 04:42:13 AM
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Biggest problem with the model is sham merchants set up to cash out stolen credit cards. Won't work.

The bad people can ATTEMPT to do that now (but they will fail bcz of verification) with the existing credit card -> BTC providers I linked to. No need to set up a merchant. Just go to the providers I linked to and use the credit card to buy BTC. That is why those providers have sophisticated verification procedures (e.g. an automated callback to the phone number that matches the card address or asking the customer capture a pic of their id and submit it), that can take up to hours. Also that is why bitinsanity only allows a maximum of $25 purchase per card (per window of time).

I am only talking about making the integration work seamlessly for the good customers.

Sounds to me like you don't have much experience with ecommerce. In 2000, I wrote an entire download site (downloadfast.com) that did payment processing for download software merchants.

Quote
unless there is a bank that will agree to not chargeback transactions that are following some defined set of requirements, this is not going to work.

From my understanding, the banks can for whatever reason simply reverse any transaction for something like 6 months. So all the user has to say is their card was stolen and it wasnt them who got the BTC.

Or the bank could say, the bitcoins are tracing direct to terrorist activity so they are confiscating the funds used.

Also Visa and Mastercard are actively making it more difficult, for obvious reasons. Short of Visa/MC themselves adopting BTC, this seems a very unlikely scenario. There are some small cap places that do this, but how long they stay in business?

They are in business now and accepting credit cards for bitcoins.

While it exists, it is a way to boostrap adoption. From the larger ecosystem, we can gain inertia to give the middle finger to credit cards.

Also these services could also accept Dwolla for purchasing BTC. Dwolla does an instant verification of the user's bank account by logging in with the user's provided credentials to the user's account at the bank's online website. The transfer takes 3 - 4 days, but it can't be charged back in most cases (ACH transfers are usually final). The same streamlining of integration that I proposed applies so the 4 day wait isn't a burden on the customer.

Also don't assume TPTB are against Bitcoin. I think they love it. The overriding globalists want to destroy the existing monetary system and replace it with a global control. A global non-anonymous ledger is a coup for them.

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February 26, 2015, 05:22:13 AM
 #4

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ACH transfers are most certainly not final.

I know damn well there is a 30 - 60 day window for extraordinary cases.  Please read what I wrote. I said in "most cases" they are final. Chargebacks on ACH are generally discouraged by the banks if the provider has done the necessary verification procedures and received permission from the owner of the bank account. Dwolla is in the business of working closely with banks on this process.

Quote
Quote from: iamback
Quote
Biggest problem with the model is sham merchants set up to cash out stolen credit cards. Won't work.

The bad people can do that now with the existing credit card -> BTC providers I linked to. No need to set up a merchant. Just go to the providers I linked to and use the credit card to buy BTC. That is why those providers have sophisticated verification procedures, that can take up to hours.

These vendors do the verification that because they are on the hook for chargebacks. They risk that in exchange for

But more importantly, they have submitted to verification of their identity, trustworthiness and creditworthiness. A sham merchant set up for the purpose of accepting btc from stolen credit cards via the service you describe (that does not require AML/KYC, but even more importantly anti-fraud verification) would not care about chargebacks, in fact it would be sure they would occur.

Bitinsanity has to verify the card holder in either case. There is no difference.

If I have a bunch of stolen credit cards, I don't need to set up a fake merchant, I can go directly to bitinsanity and try to get $25 in BTC from each card.

Where is your logic?

You could attempt to make a deal with one of the existing services, but: 1) their merchant agreement likely has restrictions on reselling,

They don't need to do reselling. All they need to do provide an GET or POST HTTP API (i.e. a special URL) to populate the BTC address field automatically and provide a redirection after the transaction is complete.

They are already sending the BTC to any address specified.

and 2) they would likely do the same verification and creditworthiness checks on you anyway (otherwise they risk being caught in the middle)

They can't check who owns the BTC address. Impossible.

You are entirely missing the programming points here. And you are a programmer.

Did the epiphany hit you yet? Bitinsanity sends the BTC to any address the customer provides. They do that now. Thus a merchant can give the customer a BTC address. And the customer is then in effect buying for the merchant. Bitinsanity has nothing to do with that. All they need to do offer a slightly more programmable API on what THEY ALREADY DO.

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February 26, 2015, 05:30:14 AM
 #5

Did the epiphany hit you yet? Bitinsanity sends the BTC to any address the customer provides. They do that now. Thus a merchant can give the customer a BTC address. And the customer is then in effect buying for the merchant. Bitinsanity has nothing to do with that. All they need to do offer a slightly more programmable API on what THEY ALREADY DO.

Quote
Quote from: iamback
Quote
ACH transfers are most certainly not final.

I know damn well there is a 30 - 60 day window for extraordinary cases.  Please read what I wrote. I said in "most cases" they are final. Chargebacks on ACH are generally discouraged by the banks if the provider has done the necessary verification procedures and received permission from the owner of the bank account. Dwolla is in the business of working closely with banks on this process.

It's not extraordinary at all. Account information is stolen, fraudulent ACHs are put through and then they are reversed. That happens constantly. It's also built into the cost structure of those offering legitimate services.

Dwolla is in the business of verifying the user and following procedures for ACH such as obtaining a signed permission with a scan of id. The instant verification is only to get the 4 day transfer delay rolling asap. Then there is 4 days for Dwolla to follow up on verification.

This is night and day difference between accepting credit cards with only an AVS verification step.

Quote
There is nothing remarkable about any of this.

What is remarkable is how obtuse you are. Are you a gatekeeper?

Quote
If you have a legitimate service to offer, and it sounds like you do, go through the necessarily verification processes and you can get signed up as a merchant. But the idea of a general purposes service that allows unverified merchants to receive BTC is just not going to work. It might work for a little while, but then it will be abused and shut down.

You don't understand the entire point of the autonomy of Bitcoin. You need to go back to Bitcoin 101 class.

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February 26, 2015, 05:39:35 AM
 #6

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If you think Bitinsanity does what you want then talk to them about an API. Why are you talking to us, when they are the ones you have the service you are looking for?

Quote
Quote from: iamback
Did the epiphany hit you yet? Bitinsanity sends the BTC to any address the customer provides. They do that now. Thus a merchant can give the customer a BTC address. And the customer is then in effect buying for the merchant. Bitinsanity has nothing to do with that. All they need to do offer a slightly more programmable API on what THEY ALREADY DO.

Great! As I said in the other message, talk to them.

One issue you will have to worry about is what happens to your business model when they shut down, which is reasonably likely, or at least a significant risk.

Because for one reason I haven't been able to get in touch with anyone at these credit card -> BTC providers. Maybe some of you guys have some contacts and can get the ball rolling.

The point of autonomy is that the market will keep adapting and finding new avenues. The monetary system is going to die and they will end up shutting the entire global economy down.

But we plan on doing something about that.

Rome wasn't built in a day. Step-by-step. Carpe diem. Seize the opportunities that exist and build more in the meantime.

These providers could potentially maximize their growth near-term and use that to find new avenues (e.g. the Dwolla -> BTC option and others).

Happy that I finally got my point through. The important first step is getting influential people to understand what I was talking about. Thanks.

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February 26, 2015, 05:46:02 AM
 #7

Why KYC and AML will collapse the global economy

Quote
If you have a legitimate service to offer, and it sounds like you do, go through the necessarily verification processes and you can get signed up as a merchant. But the idea of a general purposes service that allows unverified merchants to receive BTC is just not going to work. It might work for a little while, but then it will be abused and shut down.

You don't understand the entire point of the autonomy of Bitcoin. You need to go back to Bitcoin 101 class.

For one of many reasons orthogonal to the degrees-of-freedom efficiency means more innovation (including the ability of people in the 3rd world to quickly set up an ecommerce site without jumping through hoops, and testing a site idea before committing a lot of time to set up a proper corporate entity, etc), if someone doesn't like you in government they make a phone call and you are shut off without due process. This is the new normal.

Or you are coerced to spy for the government (or even some fraudster within the government who has the power to prevent you from reporting him to the authorities because he is the authorities) in return for not being shut down.

And so being anonymous is extremely important.

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February 26, 2015, 05:58:25 AM
 #8

Why KYC and AML will collapse the global economy

Quote
If you have a legitimate service to offer, and it sounds like you do, go through the necessarily verification processes and you can get signed up as a merchant. But the idea of a general purposes service that allows unverified merchants to receive BTC is just not going to work. It might work for a little while, but then it will be abused and shut down.

You don't understand the entire point of the autonomy of Bitcoin. You need to go back to Bitcoin 101 class.

For one of many reasons orthogonal to the degrees-of-freedom efficiency means more innovation (including the ability of people in the 3rd world to quickly set up an ecommerce site without jumping through hoops, and testing a site idea before committing a lot of time to set up a proper corporate entity, etc), if someone doesn't like you in government they make a phone call and you are shut off without due process. This is the new normal.

Or you agree to spy for the government in return for not being shut down.

And so being anonymous is extremely important.

I agree and disagree. Such services have been and will shut down due to fraud regardless of government abuse or spying, or the lack thereof. That's largely a free market outcome, in the present environment.

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February 26, 2015, 07:38:42 AM
Last edit: February 26, 2015, 08:19:56 AM by iamback
 #9

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But the idea of a general purposes service that allows unverified merchants to receive BTC is just not going to work. It might work for a little while, but then it will be abused and shut down.

Are you being realistic, defeatist, or a little of both? Omniscience?

It is ostensibly working now (well?) and proliferating (?). Apparently these were the available options some months ago:

http://99bitcoins.com/how-to-buy-bitcoin-with-a-credit-card/

And the updated list:

https://en.bitcoin.it/wiki/How_To_Buy_Bitcoins_With_Your_Credit_Card


Quote
One issue you will have to worry about is what happens to your business model when they shut down, which is reasonably likely, or at least a significant risk.

Before they shut those BTC services down, let's say I have already signed up 1000 customers in my subscription (pay as you go) business model. So now they understand they load a BTC balance into my site and they consume the balance in BTC units "pay per use".

So now they understand our site is denominated in BTC and they've learned to think in terms of their unit-of-account being BTC (and thus probably started to think about if they want to hold some BTC as an investment). Remember I am targeting virile Western males in my business, thus this overlaps well with Bitcoin's known demographics (younger white males).

Also by this time they've noticed our site is providing features they've come to depend on that are not provided by any competing site. They have already dozens of contacts in our site they don't want to lose. Thus they are hooked.

Thus they will find a way to go purchase some BTC and continue to pay us in BTC. And by that time, they've probably learned to use a more efficient means to purchase BTC than a credit card (but they may still resort to the credit card option in a pinch and these bitinsanity services need to diversify their business models to provide optional more efficient means, e.g. Dwolla).

Thus our revenue stream would not get cut off.

In that interim time, we can endeavor to jump through all the KYC and AML circus hoops, so we can accept credit cards directly.

And who knows which other avenues will arrive in the interim time as well...

Such services have been and will shut down due to fraud regardless of government abuse or spying, or the lack thereof. That's largely a free market outcome, in the present environment.

IMO a myopic and defeatist attitude. You ignore the possibility of paradigm shifts. For example, the paradigm shift that I elucidated upthread that with BTC as the output, it is impossible to prove who is receiving the funds and thus merchant agreements that exclude reselling are impotent. The traditional financial sector is paid to be dumb and slow to adapt. It could take them year or years to realize they've be outwitted by technological paradigm shifts. By that time, our ecosystem has maybe already gained critical mass.

These sites are experimenting with advanced verification methods that are not normally employed. They have the advantage that the BTC purchaser is extra motivated and willing to wait a little bit longer and jump through a few more KYC hoops than your typical credit card transaction. Dwolla is also approaching it from the same perspective.

They can do some instant verification and notify that transaction has cleared initial verification, thus allowing the parties to a transaction to decide if they want to deliver the goods. And then they can consume some hours or days to finalize the transaction and verification.

From the good customer's perspective, as long he or she can receive the goods quickly, he or she may not be affected by the delay (in contrast to Bitpay's normal transaction taking 10 - 30 minutes and being as obtuse and frustrating as hell to a novice!). The additional verification is a hassle and some customers may not follow through. So there needs to be a strong enough carrot to motivate them. In my business model, they won't be purchasing until they are already have a dire need to reply to some new contacts that they already invested effort into finding and contacting.

Also bitinsanity and dwolla appear to be able to avoid manual verification for many first time customers, when the amount involved is very small and their instant verification is able to verify with sufficient probability, i.e. a callback to the phone number that matches the address on the credit card or for example Verified By Visa. Or in dwolla's case, verifying login of the user's online banking account, because if a hacker has that, then they've likely already cleaned out the account in an easier way (such as issuing transfers from within that bank account site).

These companies depend on repeat business to lower the fraud rate and cost. Their fraud cost is built in to their fee model.

So you can't just assume that all this sites will fail due to fraud. Their entire business models are built around verification modeling. Are you sure you are omniscient?

Right now I think they are more likely to fail due to lack of customer base and dwindling interest in Bitcoin until the price finally bottoms under $150. So they need a boost to drive more customers. And to differentiate themself from the herd of companies offering this service.

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February 26, 2015, 08:16:25 AM
Last edit: February 26, 2015, 08:38:42 AM by smooth
 #10

Such services have been and will shut down due to fraud regardless of government abuse or spying, or the lack thereof. That's largely a free market outcome, in the present environment.

IMO a myopic and defeatist attitude. You ignore the possibility of paradigm shifts.

I've added bold to the pre-existing italicization to make my comment easier for you to not misinterpret.

You will also note in my other comments I did not say using a fragile gateway service was necessarily a bad idea (in fact I suggested you contact them to work out an interface), but merely pointed out you should consider how your business will cope with their (quite likely) failure to continue providing the service you need.

Quote
in contrast to Bitpay's normal transaction taking 10 - 30 minutes and being as obtuse and frustrating as hell to a novice

I have no idea what you are talking about. When I've used bit pay's service as a customer (roughly a dozen times), it took about 5 seconds and was extremely to click on the "bitcoin:" link provided which autofilled in the amount and address in my wallet.

These companies depend on repeat business to lower the fraud rate and cost. Their fraud cost is built in to their fee model.

So you can't just assume that all this sites will fail due to fraud. Their entire business models are built around verification modeling. Are you sure you are omniscient?

Right now I think they are more likely to fail due to lack of customer base and dwindling interest in Bitcoin until the price finally bottoms under $150. So they need a boost to drive more customers. And to differentiate themself from the herd of companies offering this service.

Lack of growth and limited repeat business due to dwinding interest and death due to fraud are mostly the same thing because the the fraud industry has a lot of interest in using BTC as a vehicle for getting it money out, thus it will drive up costs for these businesses, forcing them to increase their fees, further driving away what little "legitimate" interest there was to begin with.

I will agree with you on this though. Most of these businesses don't really know where their growth is going to come from; they are playing a lottery with startup capital to try to get big. If you can have a successful business that can drive legitimate traffic to them, you may help them succeed. There could be a synergy.

Finally, I'll point out one other contradiction in your reasoning. All of this extra "verification" you keep bringing up is anything but "seamless" (your word) for the customer. It is a very inefficient and expensive way to do e-commerce, which is why most normal sites don't do it (not because they, too, don't face some fraud risk). Every extra step in completing a purchase has an abandonment rate, which are cumulative and greatly increase cost of customer acquisition.

For something like a dating site, you are far better off just taking credit cards directly, not putting extra obstacles in the way of the customer. As you already pointed out, your risk from chargebacks is limited, since your cost to deliver the server is low to nonexistent. By introducing BTC into the middle of the process you are making it worse.

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February 26, 2015, 08:41:26 AM
Last edit: February 26, 2015, 08:53:11 AM by iamback
 #11

You will also note in my other comments I did not say using a fragile gateway service was necessarily a bad idea (in fact I suggested you contact them to work out an interface), but merely pointed out you should consider how your business will cope with their (quite likely) failure to continue providing the service you need.

Initially you said I should give up and go directly to being a KYC slave (you perhaps not realizing that I no longer have a residence identification in the USA to comply with the Patriot Act which stated the address on your id or utility bill with your name has to match the address of residence claimed, nor do I have "official" residence where I currently reside, so myself jumping through KYC hoops in terms of a merchant account (which I used to have obviously) is not so simple for me at the moment).

So for me the issue may be the ability to start or not start a business quickly. I would obviously choose the former (given my current time and financial constraints).

Then I pointed out some of the paradigm shifts involved, so you've apparently morphed your understanding, which is great. Admitting when you've learned from someone else is a sign of mutual respect. I think I've done the same in public when I've learned from you.

I was slightly astonished by the deaf reaction to my attempt to try to light a fire under some ways to drive adoption. I am starting to really lean towards Bitcoin's community is suffering from lackadaisical ("ho hum, oh that's just the way it is") leaders who lack vision and the ability to think outside-the-box and push some significant paradigm shifts.

Just to give you an example of the outrageous bullshit Paypal does. I sold some BTC on localbitcoins and the seller of BTC deposited to  my Paypal account using a stolen Paypal account. So the transaction was reversed. Then Paypal restricted my account (which I opened a decade or more ago) and requested I jump through additional verification hoops which I can not complete because I don't have the documents they requested and can't obtain them. I used to use my Paypal account for many things, and now I am unable too. Whose ongoing loss is that? (theirs, mine, and the entire global economy as this KYC overkill mayonnaise spreads like a plague)

The system is effectively shutting out a very talented developer who can drive $millions in GDP (and much more than that in the butterfly fan out effect).

Quote
in contrast to Bitpay's normal transaction taking 10 - 30 minutes and being as obtuse and frustrating as hell to a novice

I have no idea what you are talking about. When I've used bit pay's service as a customer (roughly a dozen times), it took about 5 seconds and was extremely to click on the "bitcoin:" link provided which autofilled in the amount and address in my wallet.

Bitpay's screen does a timeout for 10 minutes waiting for 1 block chain confirmation. The naive customer shits there wondering WTF. Then sometimes (quite often in my experience) the 10 minutes times out because the 1 confirmation didn't happen. So Bitpay says the transaction is aborted, but the payment was already sent by the customer, so the customer ends up lost having paid but not knowing how to get the confirmation from Bitpay that payment was received. I've learned that I can save the prior URL before Bitpay redirects to the timeout URL and then reload that after 30 minutes or so and get the confirmation from Bitpay. But naive non programmers would never figure that out.

That is the most piece of shit system I've ever seen. A merchant is suicidal if they are using Bitpay. They will get so many complaints from customers who don't know WTF happened.

Btw, clicking the bitcoin: link never works for me with localbitcoins. I have no idea if there needs to be a browser plugin. There are no instructions provided by Bitpay.

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February 26, 2015, 08:44:25 AM
 #12

Bitpay's screen does a timeout for 10 minutes waiting for 1 block chain confirmation.

That is up to the merchant as I understand it, and the ones I've used all accepted zero confirms as soon as the transaction was "seen" on the blockchain p2p. Just a few seconds as I said. That's perfectly safe for goods and services that aren't delivered immediately at high cost. I found Bitpay's interface to be quite customer-friendly, if the customer already has Bitcoins.



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February 26, 2015, 08:48:47 AM
 #13

Bitpay's screen does a timeout for 10 minutes waiting for 1 block chain confirmation.

That is up to the merchant as I understand it, and the ones I've used all accepted zero confirms as soon as the transaction was "seen" on the blockchain p2p. Just a few seconds as I said. That's perfectly safe for goods and services that aren't delivered immediately at high cost.

Registering domains can't accept 0 confirmations. So many other examples where 0 confirmations are not acceptable.

But I also think you are technically incorrect. Bitpay and the merchant have no way to know that localbitcoins sent the payment until the 1 confirmation is seen on the block chain (unless localbitcoins and Bitpay have a collaboration or Bitpay is sniffing transactions at major pools).

You must be lucky to be using a very integrated wallet and merchant collaboration. I don't think most naive users would see your experience.

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February 26, 2015, 08:51:41 AM
 #14

Bitpay's screen does a timeout for 10 minutes waiting for 1 block chain confirmation.

That is up to the merchant as I understand it, and the ones I've used all accepted zero confirms as soon as the transaction was "seen" on the blockchain p2p. Just a few seconds as I said. That's perfectly safe for goods and services that aren't delivered immediately at high cost.

Registering domains can't accept 0 confirmations. So many other examples where 0 confirmations are not acceptable.

That's not entirely true. The registrar can accept the order with 0-conf, but wait for sufficient confirmation before actually registering the name (delivery). If the registration fails after the payment confirms, you will need to get a refund, but that could happen regardless. You won't get instant domain registration, but there is no good reason to hold up the order process for this.

There are actually very few types of transactions that can't tolerate a short delay between order placement and final delivery.

Quote
But I also think you are technically incorrect. Bitpay and the merchant have no way to know that localbitcoins sent the payment until the 1 confirmation is seen on the block chain (unless localbitcoins and Bitpay have a collaboration).

Sure they do, they see it on the p2p which is the same way miners get the transaction in order to include it in a block (I'm sure you know this so I'm not sure why you are confused about what is going on). The problem you may run into is that localbitcoins doesn't send payments right away. It isn't a very good wallet. There is really nothing wrong with Bitpay in most cases for people using better wallets, at least not in my experience with them, which has been entirely good.

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February 26, 2015, 08:56:53 AM
 #15

they see it on the p2p

I was editing while you were in the process of replying.

or Bitpay is sniffing transactions at major pools

Localbitcoins is I think sending it. It may have something to do with not including a tx fee. Who knows! Bitcoin sucks! (e.g. tx fee unreliability)

If the major way many people buy Bitcoins doesn't work, then Bitcoin doesn't work!

There is really nothing wrong with Bitpay in most cases for people using better wallets, at least not in my experience with them, which has been entirely good.



That's not entirely true. The registrar can accept the order with 0-conf, but wait for sufficient confirmation before actually registering the name (delivery). If the registration fails after the payment confirms, you will need to get a refund, but that could happen regardless. You won't get instant domain registration, but there is no good reason to hold up the order process for this.

You hate to admit when you are wrong. Get realistic man. Domain registrars don't do it the esoteric way.

(Btw I was aware of 0-conf. I don't waste my time on sideband "noise")

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February 26, 2015, 09:29:24 AM
Last edit: February 26, 2015, 09:40:55 AM by iamback
 #16

Finally, I'll point out one other contradiction in your reasoning. All of this extra "verification" you keep bringing up is anything but "seamless" (your word) for the customer. It is a very inefficient and expensive way to do e-commerce, which is why most normal sites don't do it (not because they, too, don't face some fraud risk). Every extra step in completing a purchase has an abandonment rate, which are cumulative and greatly increase cost of customer acquisition.

Agreed. But also note that unless I have my own merchant account, the customer is going to be subject to variable verification results with any third party credit card processing company I use, because their verification model applies to all their merchants, not just my profile. (and other least common denominator bullshit too, because of shit like what Paypal does where they blame the innocent party for complicity in the fraud and so suddenly a month's worth of sales are frozen and your customers can't pay)

Moreover (and especially since your point is about attribution rate), integrating with more payment providers gives customers more options when they are declined by another provider. Thus given I am unable to quickly accept credit cards the normal way (for the reasons I stated in a prior post), then I can start with these options I have proposed in this thread.

Other ecommerce sites might which were able to prioritize regular credit card processing, instead add these other options as an added option, and not as their first option.

In either case, there can be widespread demand for the options I have proposed. Especially from those merchants who want to help drive adoption of Bitcoin and crypto-currencies. Don't dismiss the importance of social value aspects. Humans are not only motivated by the bottom line profit, e.g. see Pair.com's "green" initiative (which makes me puke since I know anthropocentric climate change is a lie but any way Lol).

And this can be free referrals and advertising for this service providers I linked to. Thus I think it should be a "no brainer" decision for them barring any unforeseen issues we have not enumerated. I note they have affiliate programs, so this can be another source of income for the merchant (albeit probably a very minor increment).

I understand the point of diminishing returns, but I found in my past experience that having a second payment option added about 15 - 20% to download software sales. It might be even greater now given the level of fraud on the internet being greater and more sophisticated.

Also I think the verification procedure at Bitinsanity might in some cases require no special action for the user. Even phone callbacks are becoming quite common place now, e.g. signing up a new gmail account, so users are getting used to do these things quickly.

Also accepting Bitcoin, causes word of mouth advertising and good will. I think some users spend more when you accept Bitcoin. I surely would have never changed domain registrars except for the fact that my prior one refused to accept Bitcoin.

I understand accepting Bitcoin is orthogonal to integrating with ways to buy and pay in Bitcoin more seamlessly from credit cards and bank accounts (via Dwolla). But if going to bother integrating with that new blockchain.info API that I linked to, then might as well offer these other options too.

Spread the love around when it is not a unjustifiable diminishing return. I think generally it works as a paradigm.

For something like a dating site, you are far better off just taking credit cards directly, not putting extra obstacles in the way of the customer. As you already pointed out, your risk from chargebacks is limited, since your cost to deliver the server is low to nonexistent. By introducing BTC into the middle of the process you are making it worse.

As I explained above, not entirely true. Yes indeed it would be best to eventually take credit cards directly if I can. But the other options have benefits any way, and I have to do the work first that I can do. If can't do the credit cards first, then do what I can do and build from there.

And I for a fact I am not the only person in that circumstance. Google statistics for example on percentage of people in the UK who have no credit card to get some feel for the fact that a lot of people probably can't readily qualify to accept credit card payments or they may have ongoing issues with compliance with ongoing escalation of documentary requirements (e.g. the Paypal bullshit example).

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February 26, 2015, 09:43:20 AM
 #17

Smooth, btw thanks I think I will contact blockchain.info and ask them why they can't sniff txs and callback before 1 confirmation. Their documention seems to indicate they are not. That is orthogonal to whether these credit card -> BTC services are worthwhile or not.

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February 26, 2015, 09:53:03 AM
 #18

But also note that unless I have my own merchant account, the customer is going to be subject to variable verification results with any third party credit card processing company I use, because their verification model applies to all their merchants, not just my profile. (and other least common denominator bullshit too, because of shit like what Paypal does where they blame the innocent party for complicity in the fraud and so suddenly a month's worth of sales are frozen and your customers can't pay)

This needs to be further emphasized, because actually using a credit card processor that has very lax verification actually ends up costing you as the merchant, because you get blamed for their inability to squelch fraud.

Suddenly you find they are placing restrictions on you, demanding you provide further documentation of transactions, demanding more extensive KYC documentation, raising your holdback percentages, increasing your fees, etc..

This can even force you to change your business model to make your product essentially available for free so that people aren't enticed to do fraud to access what you are selling. And you can only weakly upsell instead. I am being a little bit over dramatic, but some businesses may find the bottom line pushing them to an ad-sponsored model instead.

Thus the cost of the increased verification procedures may not be as relatively onerous as you might initially assume. It also depends on the capabilities of the merchant.

Fine tuning these variables with your own merchant account is for larger capital businesses. A small outfit with lower economy-of-scale is at a distinct disadvantage.

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February 26, 2015, 09:57:42 AM
 #19

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or Bitpay is sniffing transactions at major pools

No that's not how it works at all. They are probably connected to major pools, yes, and this helps them know that the transaction is widely propagated, but you can sniff it off the p2p anywhere, usually within 1-2 seconds. If you run your own node and watch the debug logs you can see the transaction arrive right away.

The risk to the merchant is that the transaction never makes it into a block, but that is not seen by customers for most Bitpay transactions (I'll admit domain registration might be different -- that is not something I've done with bitcoin).

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Localbitcoins is I think sending it. It may have something to do with not including a tx fee. Who knows! Bitcoin sucks! (e.g. tx fee unreliability)

I have no idea what localbitcoins is doing.

Get a real wallet and try again. You realize that if you don't have the private keys you don't have Bitcoin right?
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February 26, 2015, 10:02:31 AM
 #20

Smooth, btw thanks I think I will contact blockchain.info and ask them why they can't sniff txs and callback before 1 confirmation. Their documention seems to indicate they are not. That is orthogonal to whether these credit card -> BTC services are worthwhile or not.

It may be that their api is run off a blockchain database and doesn't include unconfirmed tx, I'm not sure. Their web blockchain explorer certainly shows them though, so it would be an odd omission if they don't offer that in their API.

It could also be they are trying to protect merchants from themselves by excluding them from the receive payments api, in that some merchants who accepted zero confirm transactions would be doing something dangerous (depending on the nature of the product).


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