Square, the San Francisco based digital payment firm has won a patent for a Payment Network system that will allow retailers to accept transaction in any currency, including bitcoin or other cryptocurrency.
Universal Payment Network
The US Patent and Trademark Office (USPTO) has approved Square’s filing for an application system which allows merchants to accept cryptocurrencies alongside the conventional payment methods such as fiat, and cash out into a currency of their choosing according to public documents which were published on August 21st. Square initially filed this patent application back in September 2017.
According to the patent : “The disclosed technology addresses the need in the art for a payment service capable of accepting a greater diversity of currencies…including virtual currencies including cryptocurrencies (bitcoin, ether, etc.)…than a traditional payment system in a transaction between a customer and a merchant, and specifically for a payment service to solve or ameliorate problems germane to transactions with such currencies. Specifically, the payment service described herein can facilitate real-time (or substantially real-time) transactions, allowing a customer to pay in any currency of their choice, while the merchant can receive payment in a currency of their choice.”
Square, being an established and well respected gateway, has a massive advantage up its sleeve – tremendous market penetration, therefore adding cryptocurrency payments to its present POS system will allow millions of merchants who are already a part of the network to accept bitcoin without having to migrate to another payment processor or manually convert cryptocurrency funds into fiat.
However, Square is not the first to make foray into a universal payment processor that allows merchants to accept payments in cryptocurrency that are converted into local currency automatically. Namely, BitPay – a bitcoin payment service provider headquartered in Atlanta, has been processing bitcoin payments since 2011. Hence, Square believes that this edge will give them better competitive advantage over their competitors.
Eliminating Transaction Latency
Bitcoin transactions have long been criticised for their slower confirmation times. Square’s filing shows an application for a process that allows the POS system to eliminate latency in cryptocurrency transactions that will allow bitcoin transactions to be approved at roughly the same degree of speed as a credit card transaction.
Square hopes to tackle the issue of latency by maintaining a private blockchain that will record transactions from Square-managed wallets in real-time, thus changed balances can be identified by the POS system even before the transactions are written to the public blockchain. The patent discloses that this does not completely eliminate the risk of double spend attacks, but payment services face the risk rather than the merchant.
The patent also shows that Square is looking to further speed up transactions by having the payment network itself custody the user funds, allowing Square to bypass writing any transactions to the blockchain by simply updating its internal ledger.
Is Square eyeing Bitcoin Payments?
Square being granted the patent doesn’t mean that they will integrate the proposed cryptocurrency payment network into its POS service. For instance, Bank of America has applied for dozens of blockchain patents which were described as “meaningless” public relations plays by a former VP who ultimately left the bank to establish a cryptocurrency startup.
What gives hope though is that Square CEO Jack Dorsey is a vocal proponent of Cryptocurrency. He is on record stating that he believes bitcoin could be the internet’s native currency within a decade.
“The internet deserves a native currency. It will have a native currency. I don’t know if it will be Bitcoin or not, I hope it will be bitcoin.” he said during an interview in May.
Square’s interest in bitcoin extends beyond just buying and selling according to Dorsey, at a recent earnings call he stated that the firm sees cryptocurrency as a “transformational technology.”. Also feeding fuel to the rumours is that the patent itself includes reference drawings that appear to show Square’s peer-to-peer Cash App executing Bitcoin payments. The firm began offering bitcoin trading through their proprietary app in late 2017 and early 2018.
Square is optimistic of their new venture even though trading volumes on the app have been minor compared to the global spot market thus far, but Sarah Friar – CFO of Square said recently that the company has seen “real growth” in its bitcoin user base. Square’s integration of a universal gateway for Cryptocurrency transactions will no doubt accelerate the adoption of this technology.
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