Balanced, a San Francisco-based company that provides a payment API for online marketplaces has today announced plans to integrate bitcoin into its system.
The company’s co-founder and CEO Matin Tamizi told CoinDesk that its marketplaces will benefit, as Balanced takes the payments layer off their hands:
“We create value by having one API and one platform to do that.”
Tamizi confirms that the company has partnered with Coinbase to launch the effort. He added: “There’s a 1% fee. We’re just passing on that 1% fee to the marketplaces.”
In effect, Balanced is passing on the 1% fee Coinbase levies to its customers in order to promote bitcoin over credit card transactions, as card fees are much higher. The Balanced website lists these fees at 2.9%+$.30 per transaction.
In turn, the company can offer marketplace customers a good introductory experience with bitcoin. “Coinbase makes it easy for anybody to start using and transacting with bitcoin instantly,” said Adam White, director of business development at Coinbase.
Bitcoin and digital payments
“What we’re trying to do is make it more mainstream by making the experience to purchase with bitcoin as close to established behaviour right now,” said Tamizi.
He believes that QR codes or long bitcoin addresses won’t be the future. Instead, Tamizi thinks something similar to Facebook Connect could be very successful for digital payments.
“You could use Coinbase, or perhaps another wallet in the future as well, to give us OAuth [open standard for authorization] access,” he said.
“You’re not sharing any sensitive information. Just like with Facebook Connect, you can revoke that permission.”
Balanced is only allowing marketplaces to accept bitcoin for now. However, with its escrow funds and payouts capability, there may be more bitcoin features at some point in the future. Tamizi said:
“We have to learn more about the ramifications of paying someone using just a bitcoin address.”
To begin with, the company is experimenting with debit card payouts as an alternative to bank wires, which can be pricey. “The main way that we pay people out is ACH transfers. The other thing we’ve talk about recently is pushing money via debit cards.”
This method uses a person’s debit card number to send money to a bank account – a cheaper option for Balanced than ACH wires. That feature is expected to be available for a limited beta in May.
So, for now Balanced is focused on the payment side of bitcoin. “The bigger need we see more with our customers is being able to accept bitcoin as opposed to just being able to send it out,” Tamizi said.
“But maybe being able to send bitcoin out will help us expand internationally. There’s a lot of potential there. So we’ll see.”
The company describes itself as “Processing. Escrow. Payouts. One API.” for marketplaces and crowdfunding sites. Last year it received $2m in a seed round led by Andreessen Horowitz. Currently, it has over 450 website customers.
“I think of bitcoin more of a currency similar to how US dollar of the Euro than an actual payments method. Bitcoin wallets are the actual payment method. So in this case we are giving you the ability to pay from your Coinbase bitcoin wallet.”
Tamizi added that his company still needs to learn the nuances of the relatively new currency. Its initial foray with the Coinbase partnership should be interesting given how nascent it still is for payments.