Peer-to-peer bitcoin shopping service Purse.io is now offering a $10,000 customer protection guarantee to cover users against any costs related to purchasing items through its website.
Notably, the scheme, which was launched on 7th January, will also be available retrospectively to users who report incidents on any past transactions.
Andrew Lee, CEO of the startup said:
“Our payment flow relies on two irreversible transactions: bitcoin transfer through escrow and delivery of a physical good. This is one of the reasons why we are able to deliver drastically lower fraud rates than PayPal, Visa, or any other traditional payments system.”
“The $10,000 guarantee is broad in scope to cover any unexpected costs that may arise from using our services,” he added.
The decision to roll-out the protection plan was taken after a user’s home was searched as a result of a purchase he made using the marketplace six months ago.
Purse.io apologised following an internal investigation, confirming they were “truly apologetic” and “offered to compensate lawyer fees and any other expenses related to the incident”.
“When Chesky and company were building Airbnb they did not expect meth heads to destroy a host’s home. But when it happened, they dealt with it professionally and restored user confidence. At Purse we are driving mainstream adoption, and we need to meet the standards set by Airbnb, Uber and the like. We hope other companies including Coinbase and Circle follow our lead.”
Despite boasting a relatively impressive safety record, claiming over 10,000 completed transactions and only four reported incidents in the last year, Purse.io will implement additional measures to protect its users further.
The company says that, following a doubling of the customer support team in December, numbers will again double in March.
A ‘gamification engine’ that puts spending limits on new and unverified buyers has also been introduced in an attempt to minimise fraud. Users can improve their limits by completing successful transactions and via social and phone verification.
Additionally, Purse.io has incorporated an algorithm that detects suspicious buyer behaviour by requiring verification before a purchase is made.
“As our services scale, we fully expect other edge cases that we can’t imagine today. Our job is to quickly learn from them and take measures to prevent, detect and react,” Lee said.
How it works
Purse.io, which connects users worldwide through a decentralized commerce system, markets its service at people who would like to purchase items on Amazon using bitcoin, which currently is not accepted by the online retailer.
By matching these two markets, Purse.io is able to offer bitcoin purchases on Amazon, powered by a kind of bitcoin exchange that uses a buyer discount to incentivise digital currency owners to sell their bitcoin.
The process is similar to other peer-to-peer marketplaces such as Brawker, a site that offers discount shopping at all legitimate retailers. Purse.io acts as an intermediary by facilitating a user platform, bitcoin wallet and escrow for completing transactions.
Buyers who want to use bitcoin to purchase discounted Amazon items are required to deposit them in their Purse.io accounts. They are then asked to import their Amazon ‘wish list’ using a ‘share’ URL and indicate the level of discount desired. Once this is done, the listing is posted on the Purse.io marketplace.
The person willing to buy bitcoin for a similar amount will accept the transaction and purchase the items on the wish list using a credit card so they can be shipped to the Amazon buyer.
Once the items have been received, the Amazon buyer is expected to notify Purse.io so the bitcoins can be released from escrow and passed on to the bitcoin buyer.
In a previous interview with CoinDesk, Ken Liu, second founder of the company said: “It’s kind of like an exchange, but with an Amazon layer.”