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Hackathon idea pitch for merchants that want fiat settlement
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Joined 2022.09.22
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#brainstorm

Hackathon idea pitch for merchants that want fiat settlement

Onboarding merchants to accept lightning can sometimes be a challenge. Many of them still want settlement in fiat. Luckily there are other payment providers hard at work onboarding merchants to proprietary QR-code based payment systems. What if there was a way this effort could be leveraged and built on top of?

From a merchants perspective, these proprietary QR-code based payment systems have the following workflow:

  1. Merchant charges customer $5 on their proprietary payment terminal

  2. Display proprietary QR-code to customer

  3. Customer scans proprietary QR-code and is asked to confirm the payment

  4. Payment provider confirms payment to merchant

  5. Merchant gives customer coffee

For a hackathon idea, I would like to propose to build a plugin to a bitcoin wallet where we add support for paying proprietary QR-codes that are already rolled out at existing payment terminals in many places so that the workflow looks like this:

  1. Merchant charges customer $5 on their proprietary payment terminal

  2. Display proprietary QR-code to customer

  3. Customer scans proprietary QR-code with lightning wallet

  4. Lightning wallet detects it to be a proprietary QR-code and not a lightning invoice

  5. Lightning wallet forwards proprietary QR-code to Bitcoin broker API service

  6. Bitcoin broker converts $5 to 25912 sats. Responds to API request with a bolt11 invoice for 25912 with the text "$5 payment to merchant powered by Bitcoin broker"

  7. Customer pays bolt11 invoice to Bitcoin broker from their lightning wallet

  8. Bitcoin broker scans proprietary QR-code and is asked to confirm the payment

  9. Payment provider confirms payment to merchant

  10. Merchant gives customer coffee

Neither the merchant or the proprietary QR-code payment provider need to know that the person in the store paid the invoice via a third party.

Q & A

The proprietary payment provider might not like this and will shut you down.

They might. But from their perspective the invoice got paid and they can charge the merchant for providing their part of the payment service. If they still decide to shut it down, I would argue that that it could be bad PR for them because they are inhibiting competition in the payment industry in the same way that they are complaining that the likes of Apple Pay and Visa are unfairly trying to obtain a monopoly.

Wouldn't it be better if the merchant displayed a bolt11 invoice or LNURL invoice on their payment terminal like they do in El Salvador?

Yes it would. But that requires you to convince the merchant to change their payment terminal and enter into an agreement with a Bitcoin broker. This proposal is that the lightning wallet user finds such a Bitcoin broker to make the payment on their behalf instead

Which Bitcoin broker would offer such a service where they potentially annoy the proprietary payment providers?

For a hackathon or small scale pilot, I can think of a few that would probably want to join.

Will this allow me to pay with my regular lightning wallet at maybe 95% of existing payment terminals in some countries?

YES!

Here are some videos of the checkout process of some proprietary QR-based payment systems that we could build a plugin for during a hackathon