BitPay

BitPay is a cryptocurrency payment processing company based in Atlanta, Georgia, founded in 2011 by Tony Gallippi and Stephen Pair. It provides tools that let merchants accept bitcoin and other cryptocurrencies, including stablecoins, at checkout, while choosing to receive payouts in their local currency or in crypto. It was one of the first crypto payment processors and has worked with online retailers, travel companies, charities, gaming platforms and businesses paying suppliers.

BitPay sits between crypto wallets and the traditional banking system, performing a role similar to a card payment processor or payment gateway. It also offers a self-custody wallet app and, in the United States, a prepaid card that lets users spend crypto balances converted into dollars. The company is regulated as a money services business and is often discussed alongside other crypto payment providers that handle merchant settlement.

Imagine running an online shop and wanting to accept a foreign currency that your bank does not handle. You could hire a middleman who takes the foreign money from your customers, swaps it immediately into your own currency, and pays you the next day. You never have to hold the foreign money yourself or worry about its exchange rate moving.

BitPay is that middleman for cryptocurrency. A customer pays in bitcoin or another coin, BitPay locks in a price for a short time, and the merchant can receive dollars, euros or another currency in its bank account. The merchant gets new customers without taking on crypto price risk, and BitPay charges a fee for the service.

BitPay began operating in 2011, when only a handful of merchants accepted bitcoin. It raised venture funding during Bitcoin's early growth, and in 2014 it sponsored a US college football game, renamed the BitPay St. Petersburg Bowl, as a marketing step. Over the following years it added support for more cryptocurrencies, launched consumer products such as a wallet and prepaid cards, and expanded its business payouts service. In 2021 the company agreed to pay about $507,000 to settle apparent violations of US sanctions, after the Office of Foreign Assets Control found that it had processed payments for people in sanctioned locations who bought goods from its merchants. The case highlighted that crypto processors are expected to screen customers' locations and data much like traditional providers.

A typical payment follows these steps:

1. Invoice. At checkout, the merchant's site or point-of-sale system requests an invoice from BitPay in the merchant's currency.
2. Quote. BitPay converts the amount into the cryptocurrency the customer chooses at a rate valid for a limited time, usually around 15 minutes.
3. Payment. The customer pays from a wallet, often by scanning a QR code.
4. Confirmation. BitPay monitors the blockchain, marks the invoice paid once it has received the funds and notifies the merchant.
5. Settlement. The merchant receives payouts in fiat currency to a bank account, or in crypto, on a regular schedule, minus a processing fee.

Because crypto payments cannot be reversed by the payer, merchants face no chargebacks of the kind seen with cards, but refunds must be handled separately. BitPay also integrates with e-commerce platforms through plugins and an API.

BitPay's wallet app lets users hold and send several cryptocurrencies with self-custody of keys. Its prepaid card in the United States, issued through a bank partner and running on a card network, lets holders load crypto, which is converted into dollars, and spend wherever cards are accepted. Cards of this kind are a form of prepaid access and are subject to fees and card network rules. Availability of BitPay products varies by country and state, and the company states that it complies with know-your-customer rules for higher-value activity.

In the United States, crypto payment processors that receive and transmit value for others are generally treated as money transmitters. BitPay is registered as a money services business with FinCEN and holds licences in states that require them. It must run anti-money laundering and sanctions screening programmes and apply the travel rule where it applies. In other markets, crypto payment services are increasingly covered by rules such as the European Union's MiCA regulation.

Crypto payments remain a small share of retail commerce, and many merchants that accept them see limited use, as customers often prefer to hold rather than spend their coins. BitPay drew criticism in the late 2010s for requiring wallets to support its payment protocol rather than ordinary bitcoin addresses, which some users said reduced privacy and compatibility, and for identity checks on larger payments. Network fees and confirmation times on bitcoin can also make small payments awkward, which is one reason processors promote stablecoins and the Lightning Network. Merchants should compare fees and settlement times with other processors and check how refunds and customer data are handled.

• BitPay