The pace of technological innovation in crypto finance is nothing short of astounding. Bitcoin, the “magic internet money” of yesterday, is now knocking on the doors of high street shops, bars and restaurants.
The Lightning Network (LN), a web of interconnected nodes managed by crypto enthusiasts, is driving this revolution. LN transaction throughput and speed are already rivalling those of Visa and Mastercard for a fraction of the cost.
Vlad Goryachev is a former Wall Street derivatives trader and structurer turned Bitcoin enthusiast. This article is part of CoinDesk's Crypto 2023.
More and more retail establishments are thinking to start accepting “crypto,” but don’t know where to start. This guide will present and compare side by side all the available options for the business owners to make an informed choice.
I’ll start by describing the solutions in alphabetical order and conclude with a summary matrix that could help retailers decide which to integrate. To qualify, each implementation must satisfy two criteria:
1) Enable businesses to accept BTC payments via Lightning Network
2) Do that face-to-face, (i.e., mom and pops and Box Top stores should be able to generate a Lightning invoice/QR code a client can scan to pay)
Some of the solutions will present an option to automatically convert the proceeds into local currency, others will not. It will be up to the business owner to decide whether to hold bitcoin or do the conversions manually.
I leave out of the scope other blockchains and stablecoins. In this day and age they are objectively inferior to LN as a payment rail.
A U.S. company that offers a centralized wallet and bookkeeping suite with ability to accept a range of cryptocurrencies, including bitcoin over the Lightning Network. To use it, a Lightning QR code is generated by the “BitPay Checkout” app linked with a users online BitPay account via an API code. Proceeds can be converted into local currency and withdrawn via ACH, SEPA, FPS, etc. Full KYC [know-your-customer] enrollment is required to start using the service. The company charges a flat 1% fee on the proceeds. Funds are at risk until withdrawn, because the wallet is centralized.
Other notes: Only the iPhone version of this app existed at the time of testing. Trustpilot rated it at a 1.3.
A free open-source app for iOS and Android that also accepts a range of cryptocurrencies, including Lightning bitcoin. Users can also send out remote requests for payment.
To use Lightning, BitRequest requires a user to already own a Lightning node. The solution does not have access to private keys, therefore it is non-custodial (requires no trust in any third-party). Owning a Lightning node involves setting up and managing Lightning Network connections, or channels, to other Lightning nodes – a task that requires both time and substantial investment. To convert proceeds into local currency, the user would have to open an account on a crypto exchange (KYC route) or use non-KYC, peer-to-peer services like bisq.network or Robosats.
A free and open-source app for Android that creates a non-custodial wallet and opens Lightning channels to a user's Breez node automatically (or to another chosen node). The first accepted payment, and each subsequent payment above 20 euro, bear a fee of 0.4% or a minimum of 2,000 sats, to cover channel opening costs. The channels get reused when money is paid out. The app does not offer conversion to fiat currencies, but can use any of them as a base to calculate the amount of sats for the Lightning invoice.
Breez is currently in beta testing and users must accept a warning that their funds could be lost. For this reason I could not include it in the summary matrix. However, I do find this solution very innovative.
BTCPay is a storied, non-custodial option that’s popular among crypto enthusiasts. The software code is free and open source and can be deployed through a variety of methods including a cloud or a local server. For example, one can install it with one click onto an Umbrel Lightning node running on a Raspberry Pi microcomputer. Such a server would be able to host a number of businesses (nearby shops and restaurants) all connecting to it via local Wi-Fi or cloud DNS. All of them, however, would need to trust the owner of the server. For users who do not want to set up and manage their own Lightning node there are cloud services like Voltage that allow renting for $10 per month. However, in this case the solution becomes custodial.
This option is made by a Slovakian company, and offers a similar service to BitPay for 0.8% fee. The app, which only requires an email to use, allows automatic daily settlement in crypto or fiat to a personal wallet or bank account. Though, KYC is required for fiat withdrawals. When I tested the app, I found that the BTC/EUR conversion rate was an average of 0.5% higher than prices listed on CoinMarketCap. Further, the app did not show the exchange rate or data source. There is a maximum of 0.03 BTC (600 euros) set for invoices. Crypto withdrawals, including Lightning, incur a 0.5% fee and fiat withdrawals potentially incur “additional bank fees,” according to the Confirmo website. Funds are at risk until withdrawn. Trustpilot rating: 3.0.
This subsidiary of the Slovenia-based company Eligma offers a physical POS device for 450 euros plus shipping cost as well as a free web version. Transaction fees vary by country, from 1.25% to 5%. Proceeds can be received in over 50 cryptocurrencies with optional conversion to fiat. Payouts are executed four times a month. Online onboarding is not available to test the service. Funds are at risk until withdrawn. Trustpilot rating is not available.
Lightning Network Point of Sale
A lightweight web app offering a “hybrid” solution. It is open source and free to use. The software is simply a gateway to a crypto exchange Bitfinex, but is separate from the crypto exchange’s “BFX Pay” platform. It can be run from LNPOS.me website or installed on the user's own server.
LNPOS works by requesting a Lightning deposit address from the exchange, and displaying it on a user’s phone or tablet as a QR code. Proceeds are automatically converted to a range of local currencies and stablecoins. Easy registration with email is available for testing. KYC verification is necessary to withdraw fiat. Bitfinex does not accept U.S .customers. Trustpilot rating: 3.2.
This is a “Lightning LEGO set" or, as the developers call it, a “Free Open-Source Lightning Accounts System with Extensions.” Much like BTCPay Server, it can be installed on an Umbrel node and activated using a TPoS terminal extension. However, to start accepting bitcoin payments, users need to also build or purchase a physical DIY POS terminal. This solution involves manual fiat conversions and, to remain non-custodial, a Lightning node you control.
OpenNode is a registered corporation in Delaware that accepts Lightning payments and offers optional conversion to fiat. Upfront KYC is required. Weekly bitcoin withdrawals come with a 1% processing fee while on-demand withdrawals cost 1% extra for on-chain bitcoin (but are free for Lightning). Bank transfers charge a 0.2% fee in local currencies. Funds are at risk until withdrawn. Trustpilot rating: 3.0.
The best non-custodial solution for a technically apt bitcoin investor is BTCPay Server. For a more cautious user, who would like to convert all incoming proceeds into fiat and has no desire to manage a Lightning node, the LNPOS.me web-app is a free alternative outside the U.S. For U.S. customers, OpenNode has better reviews.
BTCPay & BitRequest
Lightning node setup or cloud rental
Free or €450 per POS terminal
setup + DIY terminals
0.2% paid by clients
Free, minimum 0.01 BTC
0.5% + $1 cost
LN 100 sats, BTC .0004
BTC 1% or free weekly
Auto Fiat conversion
Daily, min. $20 or €100
Weekly with four days delay
Min €25, with €0.5 fee
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