BitPay Expands Staff to Seven Full-Time Employees

ATLANTA -- April 22, 2013 -- BitPay Inc, the world’s leading payment processor for bitcoin, announces it now has seven full-time employees working in its Atlanta office, using the funding from its seed round in January and February.

(left-to-right) Crystal Campbell, Patrick Nagurny, Paige Freeman, Tony Gallippi, Ian Patton, Kevin McInturff, Stephen Pair

With a strong focus on technology infrastructure, two new Senior Software Engineers were added under the leadership of co-founder and CTO Stephen Pair, who architected and built the platform. BitPay is pleased to announce the addition of Patrick Nagurny and Ian Patton to their Engineering team.  This team will be improving the core product, making it more reliable, and adding new features.

Paige Freeman also joins BitPay as VP of Sales.  Paige has an Industrial Engineering degree from Georgia Tech, and has spent much of her career as a top Information Technology Sales Manager/Recruiter. Paige’s role at BitPay will be to increase the merchant base, transaction volume, and revenue.  Paige will report to co-founder and CEO Tony Gallippi.

Crystal Campbell has also joined BitPay full-time, relocating from Orlando where she worked at a local restaurant and bar which has been accepting bitcoin using BitPay.  Crystal will be handling Inside Sales and Customer Support in the Atlanta office, also reporting to Tony Gallippi.

The massive increase in transaction volume during March has generated a revenue boost for BitPay, and the company is using the funds to recruit more full-time employees.  The most explosive merchant sector has been companies selling precious metals for bitcoin, which has seen a 500% increase since March as investors chose to transfer their bitcoin gains into gold and silver.

BitPay continues to acquire new merchants at a rapid pace, with over 5,500 merchants now approved to accept bitcoin payments using their service.  Recently, organizations such as the National Libertarian Party and the Freedom of the Press Foundation have begun accepting bitcoin donations using BitPay. 

Overland Park Jeep dealership in Kansas City has also signed up with BitPay to accept bitcoin as payment for any new or used vehicle at their dealership.

The Technology Association of Georgia (TAG) held a reception on April 17 to welcome BitPay to Atlanta.

About BitPay
BitPay is a Payment Service Provider (PSP) specializing in eCommerce, B2B, and enterprise solutions for virtual currencies. Visit https://bitpay.com.

Contact
Jan Jahosky
407-331-4699
jan@bitpay.com

BitPay Eclipses Silk Road in Bitcoin Sales with Explosive $5.2M March

Adds Kevin McInturff as VP Product Management

ATLANTA -- April 2, 2013 -- BitPay Inc, the world’s leading payment processor for bitcoin, announces it has processed over $5.2 million in bitcoin transactions for its merchants during the month of March, with over 5,100 completed invoices during the month.  The pace accelerated with over $3 million in transactions during the final 8 days.  This eCommerce activity from merchants selling computers, consumer electronics, precious metals, and even government services has likely eclipsed the illicit activity widely estimated from sites like Silk Road.

BitPay has also approved over 1,300 new merchant applications during the month of March, bringing their total number of approved merchants to over 4,500.  The explosive growth in BitPay’s business comes after February’s payment processing volume of $687,000 in transactions with 2,300 completed invoices.

“Merchants are clearly appreciating the superior performance of our platform compared to all others in the marketplace,” says Tony Gallippi, co-founder and CEO of BitPay.  “Any merchant selling high-ticket items over the Internet needs to look at bitcoin. And with our recent reduction in fees, our merchants are using our all-inclusive 0.99% fee to offer discounts to their customers for paying in bitcoin.”

BitPay also announces the addition of Kevin McInturff as Vice President of Product Management.  Kevin has recently worked for Global Payments as their Director of Application Development, and Kevin has degrees in Computer Science and a Masters in Management of Technology from the Georgia Institute of Technology.  Kevin’s roles at BitPay will be managing their eCommerce plugins, client libraries and API, plus managing their global Integration Partner program.  Kevin is the third full-time employee at BitPay, after co-founders Tony Gallippi and Stephen Pair.

During March, BitPay’s bitcoin payment tools have also been integrated into E-GovLink, a billing system used by local governments, and FoxyCart, a popular SaaS cloud-hosted shopping cart service.  Any company or organization using E-GovLink or FoxyCart can now add a bitcoin payment option to their business.

BitPay’s CEO Tony Gallippi will be speaking about bitcoin at the International Payments Summit on April 11, 2013 in London.

About BitPay

BitPay is a Payment Service Provider (PSP) specializing in eCommerce, B2B, and enterprise solutions for virtual currencies. Visit https://bitpay.com.

Contact

Jan Jahosky

407-331-4699

jan@bitpay.com

Applying Late Transactions to Guaranteed Rate Invoices

Typically a BitPay invoice is only active for a time period of 15 minutes.  We chose this number as a compromise between convenience and risk, meaning the time window should be long enough for a customer to launch their wallet application and send the transaction, but not too long because of the exchange rate volatility.

Since our launch in 2011, BitPay has always guaranteed the exchange rate to the merchant from the point of invoice creation, as long as the buyer pays within the 15 minute time window.  This takes the exchange rate volatility risk away from both the merchant and customer and shifts it to BitPay.

When payments arrive after the invoice has expired, they still arrive at BitPay (they are not lost) however they are not automatically applied to an invoice, and the exchange rate is no longer guaranteed.  The merchant has the right to return the payment, or have BitPay ask for more BTC if the exchange rate has dropped, meaning more BTC is needed at the spot rate to pay the amount of the original invoice.

Because of this time window, BitPay only recommends wallets and wallet services which broadcast the bitcoin payments immediately, and do not deduct the fee from the payment amount (fees should be subtracted from the user's remaining balance, not from the amount being sent).  The list of our recommended bitcoin wallets is here.

Over the past week, many transactions coming from a popular online wallet service Coinbase were arriving many hours, and sometimes several days after the buyers had sent the transactions.  The bitcoin wallet service did not actually broadcast the transactions to the bitcoin peer-to-peer network for many hours or days.

These payments are now arriving with the current exchange rate in the mid 60s, but the invoices were created over the past few days where BitPay guaranteed an exchange rate in the low 70s.  The funds received now are approximately 10% below what is required to cover the expired invoice.

BitPay realizes that the buyers in this situation are not at fault for this delay, and so BitPay will not be asking the buyers to send an additional 10% worth of bitcoins to cover their invoices.  BitPay will manually apply the payments to the expired invoices and consider them paid in full. Merchants will receive the IPN after the payment is applied.

For this particular set of circumstances, BitPay will assume the 10% loss on these invoices so that the buyers, and our merchants, are not affected by the inconvenience of the online wallet service that experienced technical difficulties.   This applies to the specific dates and times and specific wallet service in question, and not for all late arriving payments.

How FinCEN guidelines affect BitPay

We have received numerous industry and press inquiries as to how the March 18 Guidance from FinCEN regarding virtual currencies would affect BitPay.

FinCEN's guidance that "virtual currency" is a type of money and should be treated like "real currency" is a step in the right direction.  We have always worked under the impression that virtual currency is money, so we are glad that FinCEN now agrees with that position.

The heart of FinCEN's guidance recommends that activities which are classified as Money Services Businesses (MSB) or Money Transmission Businesses (MTB) should be applied equally to both real currency and virtual currency.  Therefore activities such as remittance, payroll, and check cashing would be regulated whether the type of money is real or virtual.

We should pay close attention to footnote #10 of the guidance, which states:

¹⁰ FinCEN's regulations provide that whether a person is a money transmitter is a matter of facts and circumstances. The regulations identify six circumstances under which a person is not a money transmitter, despite accepting and transmitting currency, funds, or value that substitutes for currency. 31 CFR § 1010.100(ff)(5)(ii)(A)-(F).

Looking up the six exemption circumstances in 31 CFR § 1010.100(ff)(5) will return the following:

(ii) Facts and circumstances; Limitations. Whether a person is a money transmitter as described in this section is a matter of facts and circumstances. The term “money transmitter” shall not include a person that only:

(A) Provides the delivery, communication, or network access services used by a money transmitter to support money transmission services;
(B) Acts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller;
(C) Operates a clearance and settlement system or otherwise acts as an intermediary solely between BSA regulated institutions. This includes but is not limited to the Fedwire system, electronic funds transfer networks, certain registered clearing agencies regulated by the Securities and Exchange Commission (“SEC”), and derivatives clearing organizations, or other clearinghouse arrangements established by a financial agency or institution;
(D) Physically transports currency, other monetary instruments, other commercial paper, or other value that substitutes for currency as a person primarily engaged in such business, such as an armored car, from one person to the same person at another location or to an account belonging to the same person at a financial institution, provided that the person engaged in physical transportation has no more than a custodial interest in the currency, other monetary instruments, other commercial paper, or other value at any point during the transportation;
(E) Provides prepaid access; or
(F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds.

We have highlighted exemptions (B) and (F) which describe the activities performed by BitPay.  The IRS has defined rules for classifying Payment Processors, or Payment Settlement Entities (PSE) in 2008 with the Internal Revenue Code 6050W. This ruling and others clearly state that Payment Processors and Payment Settlement Entities are not Money Transmitters.

BitPay has a contractual agreement with our sellers for transaction processing, clearance, and settlement of funds that arrive for a given merchant account.  BitPay does not have any contractual agreement with any sender of funds, and does not engage in any activities that would be considered Money Transmission activities.

BitPay has voluntarily registered with FinCEN in 2011, so that we have an online account to electronically report any suspicious activity that may arise.  However, to date we have not seen any suspicious activity and have not filed any reports.  All of our merchants are identified and we know their bank account information, so there is little likelihood for someone engaging in criminal activity to use our service.

On a side note, FinCEN may want to get clarification from Ben Bernanke, who says that gold is not money.

Bugs and Forks

Last night BitPay's servers started huffing and puffing.  At first we thought we might have had a database corruption issue, but on further inspection we realized that one of our Bitcoin nodes seemed to be out of sync with the rest of the network.  It had gone into what is called "safe mode" and was refusing to provide details about transactions.  This was affecting real time notifications of transactions as purchases were made.  

We started looking around on IRC and forums and discovered that others had noticed problems as well.  This led us to conclude that it was not likely an issue specific to Bitpay (likely not data corruption).  Several of the developers in the #bitcoin-dev chatroom soon realized that the issue was due to pre 0.8 versions of Bitcoin-QT not recognizing recently mined blocks (due to a bug in the pre 0.8 releases).   This meant that the block chain had forked.  Bitcoin-QT 0.8 nodes and  pre 0.8 nodes we're on a different version of the block chain.  

Although it does make the network more vulnerable to a double spend attack, this actually isn't all that bad to the average user because their transactions would most likely be confirmed in both forks, however it's very bad news if you're a miner.  Ultimately one of the forks would survive and the other one would die out.  If you're a miner on the fork that dies out, it means your reward for finding the blocks will be worthless.  Miners needed to quickly decide which fork to support and then all get on the same page.  They decided to direct all their mining efforts on the pre 0.8 fork.  

This decision was made because the alternative would have required everyone to upgrade to 0.8 or for someone to develop a patch that fixed the pre 0.8 software.  Mining on 0.8 would be more risky by the fact that many people might not choose to upgrade, creating a more long lasting fork where the ultimate winner is not as clear.

Once we ascertained that the pre 0.8 fork would survive, we took the affected Bitpay node out of safe mode and full service was restored.  

• Customers that placed orders during the time of the network issues may have noticed that their transactions were not immediately recognized.  These transactions will eventually get credited to those invoices and confirmed by the network.  
• If you're a merchant, you may have received warnings about unconfirmed invoices, those invoices will eventually be confirmed and credited to your account.  
• We've checked all payments into BitPay and at this point there are no instances where a transaction has failed to confirm due to this incident.  

If you would like more technical details on the issue, see the following page at bitcoin.org: http://bitcoin.org/chainfork.html

Kudos to the dev team, miners and pools operators for their quick diagnosis and correction of the problem.  It is actually a great demonstration of how Bitcoin is more than just the software and the protocol it implements.  It's also the network of users, miners, developers and service providers that can quickly react to situations such as this to preserve the integrity of the system.

BitPay adds Google Authenticator, Seven new countries for direct deposit

BitPay has added support for Google Authenticator, for those merchants looking for an extra layer of security on their merchant account.

To enable Google Authenticator on your bitpay.com merchant account, login and go to My Account - Two Factor Authentication and follow the instructions.

BitPay also adds seven new countries where merchants can receive direct deposits into their local bank accounts.  The new countries supported are:

Australia
Belgium
Denmark
Norway
New Zealand
South Africa
Sweden

The direct deposits are made every business day.  BitPay's all-inclusive processing fee of 2.99% includes the guaranteed exchange rate, automated payment processing, currency conversion, and funds transfer.

BitPay Surpasses 10,000 Bitcoin Merchant Transactions, Zero Cases of Payment Fraud

ATLANTA -- January 22, 2013 -- BitPay, Inc, the world leader in bitcoin payment processing, has successfully processed more than 10,000 bitcoin payments for their merchants.  In their first 10,000 transactions, BitPay has experienced exactly zero cases of payment fraud.  Not a single payment received has failed to confirm over the bitcoin peer-to-peer network, and reversals are not possible with bitcoin payments.  Companies can now ship their merchandise with confidence to any country on Earth.  This is a welcome relief for internet merchants who are battling payment fraud every day.

The key benefit that companies are starting to realize with bitcoin is the fraud mitigation.  With credit cards, one out of every 167 transactions turns out to be fraudulent for domestic orders, and for international orders the rate is one out of every 50 transactions (source:  Cybersource 2012 Online Fraud Report).  

Every day, more companies are starting to see the value that bitcoin can bring to their business, whether it’s reducing risk, expanding international sales, or improving efficiency.  However, integrating bitcoin has some unique challenges that other payment types do not have, and companies will quickly run into these challenges. 

“We have a good grasp of all the edge conditions and scaleability issues that a typical company would face integrating bitcoin payments, since we’ve done this over 10,000 times,” says Anthony Gallippi, co-founder and CEO of BitPay.  “We have some tremendous expertise in this area.  This expertise puts our business solutions well ahead of all others in the marketplace.”

BitPay has the most expansive line of bitcoin payment tools available, including the leading Payment Gateway API for bitcoin, and plugins for popular eCommerce platforms such as Magento, WordPress, and Virtuemart.

BitPay recently closed their seed round of funding for $510,000 from a small group of angel investors.  BitPay now has over 2,400 merchants using its platform to accept bitcoin payments, and recently disclosed that in 2012 they processed over $3 million in bitcoin payments for its merchants. 

About BitPay
BitPay is a Payment Service Provider (PSP) specializing in eCommerce, B2B, and enterprise solutions for virtual currencies. BitPay offers easy tools to accept bitcoin payments online or in person, with the option to receive the funds as a bank direct deposit.  Visit https://bitpay.com

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Jan Jahosky
407-331-4699
jan@bitpay.com