The original premise of Bitcoin was to be used as a payment system – an alternative to the Visas and Mastercards of the world. Over time, transactions became more expensive on-chain, and the attractiveness of using Bitcoin as a payment mechanism was no longer very appealing. However, with the launch of the lightning network, that vision has again come to the forefront.
As goes Bitcoin, so goes the rest of the market, i.e. all the other crypto. The use of crypto as a payment mechanism is back on the table. As more people, especially in Asia, start using crypto, its use and attractiveness as a consumer payment means is only going to go up from here.
In fact, people may even start using crypto seriously to get away from the banking infrastructure, that is expensive and hard to obtain especially in the developing world. For crypto to succeed though, it needs to present something better than what existing payment processors can provide. Luckily, with the use of smart contracts and the right framework, it is possible to do just that.
Push vs. Pull
One basic but big difference between crypto payments and regular payments is the idea of push vs. pull payments. A push payment is when I actively send a merchant a transaction. A pull payment is when a merchant pulls money or credit from my account. Crypto is, by design, a push payment mechanism. However, we can invert that with the help of smart contracts, i.e. a user may authorize an entity to pull specific payment amounts based on defined criteria.
This is where smart contracts come into the picture, and how crypto payments can be more powerful than debit cards and the like. You can create fairly complex structures. For example, say you can code in a 2 month discount, so your smart contract will pull in $10 per month for the first 2 months, and then $15 thereafter for a period of 8 months, and then stop. You cannot really code this into the traditional financial instrument instructions, but you can on the blockchain.
Merchants can get creative in their marketing and promotion, since the billing is able to support all sorts of complex functionality.
PumaPay is building the infrastructure required to support these complex billing and merchant point of sale tools. This will help the company capture some of the merchant volume going over crypto. PumaPay provides not only the smart contract suite but also APIs into traditional services, which are required by merchants to maintain and balance the books (at least until all the world has moved into a blockchain based payment solution!). PumaPay uses a native ERC20 Ethereum based token for this purpose.
The company also provides a standard set of suites for merchants to onboard them easily. From a merchant point of view, PumaPay integrates nicely into their existing ecommerce and point of sale systems, and just work smoothly with everything else, with proper integrations. From a consumer point of view, PumaPay has a wallet that just scans a QR code and the tokens are transferred to the merchant.
If crypto is to become a true payment processor for everyday transactions, we need more startups building the tools for merchant adoption.
Read more about PumaPay here.
Photo Credit: Dave