Georgia-based bitcoin merchant processing provider BitPay has announced the launch of the Bitcoin Payment Protocol, a wallet update designed to eliminate the “human error in making a bitcoin payment”.
In the official announcement, the company said the update would reduce friction at the point of sale by eliminating the need for consumers to copy the address and amount into their wallet. At checkout, users who scan a QR code or click to initiate payment will only be presented two options, pay or don’t pay.
Though this may sound like a small improvement, Stephen Pair, CTO and co-founder of BitPay, explains these errors can create inefficiencies that can bog down the payments network.
“We see common errors that people make. Some people pay too little or too much to a BitPay invoice, so that creates a payment exception that requires a support ticket.”
These leftover payments not only detract from the customer experience, however, they also have broader implications for how BitPay interacts with the mining community.
Notably, the update comes just one week after it launched Bitcore, an open-source project for app developers, and as the company is onboarding more merchants than ever.
BitPay has estimated that it now brings on 1,000 new merchants a week.
Reduced consumer friction
BitPay said that the new update improves the usability of QR codes for bitcoin payments by supporting BIP 73, an enhancement to the payment protocol BIP 70. BIP 73 seeks to reduce the density of QR codes.
The company said that this will ensure its QR codes work better in low-light settings and at longer distances. Further, they come with advantages for first-time users, as they are also normal HTTP URLs that can send instructions to devices.
The Payment Protocol makes improvements to ease merchant-seller disputes, too, as it supplies a refund address along with each payment.
Explained BitPay:
“This approach to refunds works on the block chain, with any wallet software, and does not require the buyers to have a BitPay account.”
For a more on BIP 73 and its technical improvements, you can find a detailed overview here.
A market for transaction fees
BitPay explains that the big picture behind the update is that it eliminates the Bitcoin mesh network that had previously helped communicate transactions between both senders and recipients and originators and the mining community.
Explains Pair:
“With the payment protocol, you communicate the payment from sender to recipient directly […] so the wallet can send it to BitPay and then BitPay broadcasts it on the mesh network.”
This direct communications path, Pair said, helps BitPay account for nodes that may require certain fees in to maintain their profitability.
Pair went to on to detail how this would take the guesswork out of determining the fees for a transaction to get included in a block, help to develop a market around processing transaction fees and allow BitPay to better ensure these transactions can be sent through a block within a desired timeframe.
“Creating a true market for transaction fees, is really where the market needs to evolve,” Pair said.
Image credit: QR code via Shutterstock
Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.