More customers want to settle their bills using bitcoin. Businesses are open to it, but they don’t want the volatility risk of taking bitcoin directly. Enter BitPay: the middleman between customer and business. Can it be the bridge between bitcoin and the rest of the world? We find out.
What is BitPay?
BitPay is the world’s largest bitcoin payment processor. It was created as an easy way for businesses to accept bitcoin as payment.
Customers make payments in Bitcoin or Bitcoin Cash. Then BitPay changes the payment into one of eight major currencies like the US Dollar and pays it directly to the business.
At the time the customer pays, it locks in the exchange rate. That means BitPay takes the hit if Bitcoin fluctuates from the time the customer pays to the time the money reaches the business.
It charges merchants a flat one percent transaction fee, which they say makes them more attractive than the three percent fee that some credit card companies charge.
Who created it?
BitPay was founded in the United States in 2011 by Tony Gallippi and Stephen Pair.
A brief history
- May 2011 – BitPay founded
- May 2014 – It raises $30 million in investor funding
- May 2016 – It launches BitPay Visa in US
- May 2017 – It launches BitPay Visa in Europe
- March 2018 – It allows payments in Bitcoin Cash
What’s so special about it?
BitPay certainly isn’t the only game in town; similar companies include Coinbase, CoinGate, and CoinsBank all offer similar services. But as an early adopter, BitPay is one of the most recognized and well-established.
It also offers other services, like the BitPay card–a pre-paid Visa debit card for consumers. After paying $10 for the card, a person can load it up by converting bitcoin from their bitcoin wallet into US Dollars. Then they can use the card anywhere that accepts Visa. It’s a harmonious way to bring crypto and the real world together.
BitPay also offers an open-sourced wallet for storing bitcoin. It is popular, though it has come under intense scrutiny after hackers managed to tamper with the code – stealing private keys from users.
Did you know?
BitPay has an impressive roster of clients, including Microsoft and Virgin.
How does it work?
BitPay offers businesses different ways to use it.
- Online: For online transactions, businesses can add a simple BitPay payment button to their site. There’s also a shopping cart plug-in that’s compatible with software like Shopify.
- In-store: Retailers can collect money through BitPay Checkout, which is an app that generates a QR code. The customer scans the code with their app and pays the amount using their own bitcoin wallet.
BitPay makes money by charging merchants a one percent transaction fee. It also charges personal users a network cost fee and a miner fee. The miner fee covers the work of bitcoin miners who verify and add transactions to the blockchain network.
The company says its focus is offering more options for businesses and individual customers. It recently announced the option to give merchant payouts in Gemini dollars and Circle USD Coin, which are both pegged to the value of the US Dollar. These stablecoin payments further combat the volatility of crypto.
In 2017, BitPay said it was on track to process $1 billion in payments. With its claim to process payments more quickly than international wire transfers, and all for a flat one percent fee, it will continue to attract attention for cross border payments.