How Payment Protocol Is Eliminating Costly Bitcoin Payment Errors: Stats and Results

UPDATE, 9/26/18: View our full list of frequently asked questions about BitPay and Payment Protocol.


Earlier this week our CEO Stephen Pair shared a deeper look at the costs of bitcoin payment errors and why we implemented the Bitcoin Payment Protocol to eliminate them.

Prior to our Payment Protocol requirement on BitPay invoices, thousands of purchasers per week were making mistaken underpayments, late payments, and overpayments to BitPay merchants. These errors happened either because of sending wallet/account issues or user mistakes. We've dealt with these errors since the start of BitPay, and we've spent a lot of time working on ways to reduce them. Today BitPay refunds mistake payments automatically, and we've built a growing body of resources to help purchasers learn how to avoid common payment errors.

With the growing costs of sending and refunding bitcoin payments (average bitcoin miner fees are now more than $10 per transaction), preventing payment mistakes has become an urgent need for our merchants and their customers. Bitcoin users can't afford to make mistakes with transactions and still pay the cost of miner fees for orders which don't complete successfully.

Source: https://bitcoinfees.info/, Date: 10 January 2018

The miner fee amounts required to send many refund transactions are frequently now higher than the refundable amounts themselves. And our merchants can't afford the support costs of customers who lose money due to these mistakes.

How is Payment Protocol helping?

The good news is that Payment Protocol is working to eliminate bitcoin payment errors. And it's working in a dramatic way.

In early December we began testing a Payment Protocol URL requirement on a limited percentage of BitPay invoices. We then implemented a full Payment Protocol requirement for BitPay Card orders and BitPay Card loads on the 14th and 21st of December, respectively. We introduced the full Payment Protocol requirement for all BitPay invoices on the 22nd of December.

We've seen the seven-day moving average for underpayments to BitPay merchants fall by approximately 90.24% month over month (12/09/17 vs. 1/09/18), with a reduction of 70.24% in the seven-day moving average for overpayments (12/09/17 vs. 1/09/18).

BitPay Invoice Underpayment Count, Last 90 Days. 90.24% 7DMA Decrease – 12/09/17 vs. 1/09/18

BitPay Invoice Overpayment Count, Last 90 Days. 70.24% 7DMA Decrease – 12/09/17 vs. 1/09/18

So far, the switch to a Payment Protocol requirement has saved thousands of bitcoin purchasers from making costly and sometimes irreversible payment mistakes. It's also prevented the loss of large amounts of bitcoin to miner fees which users must front to send mistaken transactions and get refunds for them.

For BitPay's merchants, Payment Protocol means fewer support issues and a far smoother payment experience for new bitcoin users. The vast majority of new payments received will complete seamlessly.

We're not done yet. These are just the results from the first stage of our Payment Protocol requirement rollout. In the next couple of months, we will deploy improvements which will completely eliminate payment errors.

What still needs work?

Our Payment Protocol requirement has been the single most effective improvement to date for secure, seamless bitcoin payments on the BitPay platform. But we know that we still have work to do to deliver a great payment experience for our merchants and their customers.

Since fewer wallets currently support the Bitcoin Payment Protocol (currently six major wallets support it, including BitPay's BitPay and Copay wallets), many purchasers will have to switch wallets before paying. We've created a video guide to help people switch easily, and we're currently developing new design concepts to make the payment experience even easier for first-time bitcoin purchasers. This will also help purchasers unfamiliar with Payment Protocol QR codes and URLs to successfully complete their transactions.

We will continue to drive toward creating more payment options for BitPay merchants' customers. We're already working to help two more top bitcoin wallet providers become compatible with BitPay invoices. Please monitor the BitPay blog for updates as we add more compatible wallet options for purchasers.

What's coming up next?

We will soon begin work on a new json implementation of Payment Protocol's features, which will make implementing these payment improvements far simpler for wallets across the bitcoin payment ecosystem.

Read our original blog post on why we are adopting a Payment Protocol requirement for BitPay payments.

Read our CEO's post on Payment Protocol in the bitcoin payments ecosystem.

Subscribe to the BitPay blog for more updates as we move toward our goal.

UPDATE/CORRECTION, 1/13/18: A previous version of this post briefly referenced "tens of thousands of bitcoin purchasers" who have avoided payment errors. Conservatively, the payment exception reductions would have prevented payment errors in the thousands, not tens of thousands.

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