Bitpay
BitPay is a global bitcoin payment service provider headquartered in Atlanta, Georgia. It was founded in May 2011 by Tony Gallippi and Stephen Pair. BitPay provides bitcoin payment processing services for merchants, and is one of the largest bitcoin payment processors. In 2014, BitPay started processing US$1 million daily.
In 2014, BitPay announced partnerships with merchants including Microsoft, NewEgg, TigerDirect, and Warner Bros. Records. In the same year, BitPay also partnered with payment systems operator PayPal as well as merchant acquirers such as Global Payments and Alternet Systems.
BitPay has developed open source bitcoin projects, including BitCore and Copay.
History
2011 – 2012
BitPay was first founded in 2011 to provide mobile checkout services to companies that wanted to accept bitcoins. Following the foundation of the company, co-founder Gallippi visited a conference in Prague in November 2011 to discuss bitcoin. At the time he announced that the company had around 100 merchants actively using their service. Within the first year by October 2012, BitPay had grown to having 1,100 active merchants.
One of the first major partnerships came in 2012, when BitPay became the official bitcoin merchant for WordPress. The move came to make WordPress more accessible to bloggers in countries that frequently faced blocks for either financial or political reasons. Bitcoin at the time had no central authority, meaning BitPay couldn’t lock entire countries out.
In September 2012, the company announced that it had reached the milestone of 1,000 merchants using BitPay to accept bitcoin payments. Around the same time a breakdown of BitPay’s customer base was discussed with around 60% of their merchants based in the United States. Europe and the UK accounted for 25%, with the remaining merchants spread across a total of 98 countries.
2013
BitPay announced in January 2013 that they would be relocating their headquarters to Atlanta, Georgia from their previous location, Orlando, Florida. The move came following the announcement the company had secured $510,000 in seed funding. According to the company’s co-founder, the city of Atlanta was chosen due to the number of fintech companies located in Georgia. At the time the Technology Association of Georgia (TAG) stated that the state of Georgia was home to more than 90 fintech companies. Later that year, it was announced that the first bitcoin charity would be established, the BitGive Foundation. The charitable foundation was created by Connie Gallippi, the sister of BitPay’s Chairman and co-founder, Gallippi. The board of directors included the BitPay cofounder, Pair. Shortly after the launch of BitGive, it was announced that BitPay would be the merchants for the charitable organization.
Gyft, who specialise in gift cards, partnered with BitPay in 2013. Payments began to be processed initially via Gyft’s Android app. During an interview with Tech Crunch Gallippi announced that BitPay was processing on average $5 million per month in Bitcoin transactions for its merchants. In May 2013, BitPay announced that they had raised $2 million via Founders Fund.
In September 2013, the company announced it had reached the milestone of 10,000 merchants. Gallippi stated that since the foundation of the company they had processed over $34m, which was the equivalent to 270,830 bitcoins at the time on the Bitcoin Price Index.
BitPay developed a processing module in 2013 for WooCommerce, which allowed the company to process online orders made with Bitcoin. The move allowed orders fulfilled by Amazon.com to be placed with Bitcoin, but meant that Amazon and other e-commerce sites would receive the amount in their given currency. In late 2013, BitPay was used for the purchase of a Tesla Motors car, the Model S in California. Until that point, car purchases using Bitcoin had been rare. The partnership between the Lamborghini dealership and BitPay continued when news of the purchase featured in the media. The media coverage led to other potential customers to contact the dealership, requesting to pay in Bitcoin.
2014
In 2014 BitPay expanded its North American presence beyond its headquarters in Atlanta, opening offices in New York City, San Francisco and St. Petersburg, Florida. BitPay’s European headquarters opened in Amsterdam and their South American Headquarters were opened in Argentina.
In January at CES 2014, BitPay announced that 12,000 merchants had signed up to their service. The D Las Vegas and Golden Gate Hotel and Casino both announced that BitPay would be used as their chosen merchant for Bitcoin in Las Vegas. They were two of the first casinos in Las Vegas to accept Bitcoin.
Shortly after CES 2014, the NBA basketball team the Sacramento Kings announced they would become the first major sports franchise in North America to accept Bitcoin as a form of payment for tickets and merchandise. The transactions would be processed by BitPay, making them the first Bitcoin merchant to process sports tickets on such a large scale. The implementation of the virtual currency would start from March 1, when fans and visitors to the Sacramento Kings games would be able to use Bitcoin to make the payment. In this instance, fans would pay in Bitcoin before BitPay converted the Bitcoin amount into dollars for the Sacramento Kings. The move came after Adafruit began accepting Bitcoin in November, which enabled the Sacramento Kings to accept the cryptocurrency. Limor Fried stated at the time one of the biggest obstacles that BitPay helped overcome was letting “clients stay out of the currency and exchange process”.
Within the same month, it was announced that Zynga would also begin to accept Bitcoin, with BitPay as its merchant. The deal would be for in-game purchases for the games FarmVille 2, CastleVille, ChefVille, CoasterVille, Hidden Chronicles, Hidden Shadows, and CityVille, which was confirmed by CNET following the initial announcement on Reddit. The news of the partnership between BitPay and Zynga prompted a sharp rise in the Cryptocurrency. This was following the fall in December 2013 after the Chinese government took steps to enact a crackdown on the currency.
In June 2014, it was announced that the rapper 50 Cent would be accepting Bitcoin for his new album release, Animal Ambition. According to USA Today, all the Bitcoin purchases for the album would be processed by BitPay. At the time of the album release, many independent artists had accepted Bitcoin as a form of payment before 50 Cent. He was however seen at the time as one of the best-known musicians to accept the digital currency as a form of payment. BitPay in August 2014 was the merchant for one of the largest home purchases to be made using the Bitcoin currency. The property was located near Lake Tahoe at a value of $1.6 million or 2,739 bitcoins. Around the same time of the transaction for the property on Lake Tahoe, the Wall Street Journal announced an American-based company would become one of the first nationally to stop receiving dollars and only accept payments through BitPay. From 2016 onwards Euro Pacific Precious Metals would only receive payments in Bitcoin, with BitPay acting as the merchant for all the transactions. In September, BitPay announced that they were partnering with processing giant PayPal for bitcoin acceptance in their Payment Hub.
In 2014, BitPay merchant BitGive became the first bitcoin charity to be recognized as a charitable organization by the IRS and was granted 501(c)(3) status.The 2014 FEC ruling that bitcoin donations can be accepted by political campaigns and organizations led to BitPay partnering with CoinVox and other fundraising organizations. In June, BitPay became the first Bitcoin company to sponsor a North American sports event. They sponsored the St. Petersburg Bowl, a college bowl game. Following the announcement, over 100 companies in the St. Petersburg area took steps so that they could accept the digital currency before the first event.
2015
In September 2015, the company sued its insurance provider in regards to non-coverage of a 5000 BTC theft that occurred in December 2014.
In May 2016, BitPay launched the BitPay Visa Prepaid Debit Card, the first prepaid Visa debit card available for bitcoin users in all 50 US states. At Money2020 in October 2016, company CEO Stephen Pair introduced the BitPay app, a secure bitcoin cryptocurrency wallet built on the company’s open source Copay wallet platform.
The company also added new bitcoin-accepting firms including gaming platform Steam, nonprofit Heifer International, and precious metals provider JM Bullion. New collaborations and releases with Intel and Microsoft’s Azure Cloud platform brought new features and capabilities to BitPay’s Copay and Bitcore open source platforms.
2017
In December of 2017, Bitpay recieved notice that their European card provider, Wavecrest, would no longer be available to process loads and payments leaving thousands in cryptocurrency stranded in these wallets. Visa made an announcement in January of 2018, reporting that the European card issuer was then suspended from offering any new cards and would no longer be in their payment network. Visa later released a statement saying that they were not targeting cryptocurrnecy cards but instead WaveCrest was not in line with Visa’s terms of service. At the time of this writing, United States Bitpay cards were not affected due to having another card issuer.
Services
BitPay enables merchants to accept bitcoin in payment for a transaction. Formally, BitPay enters into the bitcoin transaction on the merchant’s behalf, and converts the bitcoin amount to one of 30 currencies of the merchant’s choosing. Bitpay mitigates the risk of bitcoin price volatility by allowing the merchant to accept bitcoin which are immediately converted to a local currency. BitPay transactions are non-reversible, making it valuable for merchants who are working internationally. In 2013 it was announced that merchants could accept bitcoin and receive fiat currency the next day for a 0.99% fee.
In July 2014, BitPay announced that it would offer free and unlimited payment processing, forever. This announcement resulted in TechCrunch declaring that bitcoin is a catalyst for the commoditization of payment processing. Merchants have the ability to accept bitcoin with open source plugins and hosted software.
The service for Bitcoin payments, fulfilled by Amazon was first introduced in 2013 and was seen as a positive move for the Bitcoin currency. The module was developed with WooCommerce and has meant that web stores using Amazon.com for fulfillment could from that point forward accept Bitcoin currency. Following the integration it was explained that the module worked closely with the fulfilment API and that the process would be completed automatically. When compared to other processors such as PayPal, many of them have to go through and enter information manually in order to complete the purchase, which isn’t the case with BitPay.
In addition to their eCommerce offerings, BitPay also has point-of-sale integration with SoftTouch, VisualTouch and DC POS as well as a Web-App and Android app. The company also provides a payroll API whereby American employees can elect to have all or part of their salary paid in bitcoin. 2014 also brought the introduction of Get Bits, an easy to use Facebook app designed for Bitcoin beginners that searches a user’s network to find someone who has Bitcoin available.
BitPay employs members of staff to work on open source projects to benefit the Bitcoin currency. In 2013, one of their new developers who had moved from Red Hat stated that he had been employed by BitPay to simply work on open source projects to aid the development of Bitcoin.
Since 2013 BitPay has offered various card program. In 2016 it opened the BitPay VISA card that enables users of BTC and BCH to spend that cryptocurrency at VISA merchants. While the card program has had some struggles since its launch, the BitPay card has a reputation as being a viable option from a company with a long history in the crypto space.
Transactions
When an invoice is presented for the customer to use when paying, the Bitcoin address to pay is shown. A QR Code of that address is also shown, allowing easy payment from a mobile. The invoice also include a button for using the URI payment method which will allow easy payment from a bitcoin client that supports URI links.
The message “This invoice is valid for 15:00 minutes ONLY” is displayed and a timer counts down the clock. The reason this timer exists is to protect BitPay from exchange rate moves — the price quoted is only valid for fifteen minutes.
If payment arrives after the timer has expired, an additional payment amount may be required to cover the difference in the exchange rate from the original quote.
Fees
The automated solution and shopping cart is available for all merchants for a fee of 0.99% of the value of the sale. If the merchant wants to receive a currency other than bitcoins, (e.g. US Dollars) BitPay can trade the coins for dollars, and send a direct deposit to the merchant’s bank account. Merchants can have no currency risk of bitcoins at all.
Settlement
Sales proceeds may be withdrawn as bitcoins, as a bank transfer, or split among more than one method. For example, 20% of proceeds might be withdrawn as BTCs and the rest converted and sent as a bank transfer.
Withdrawals as direct deposit are available for the following, .
- Australia (AUD)
- Belgium (EUR)
- Canada (CAD)
- Denmark (DKK)
- France (EUR)
- Germany (EUR)
- Italy (EUR)
- Mexico (MXN)
- Netherlands (EUR)
- New Zealand (NZD)
- Norway (EUR)
- Spain (EUR)
- South Africa (SAR)
- Sweden (SEK)
- United Kingdom/UK (GBP)
- U.S. (USD)
Funding
Initial funding came from a variety of sources including Shakil Khan, Barry Silbert, Jimmy Furland, Roger Ver and Trace Mayer.
In January 2013 the company announced US $510,000 in angel investment, its first external capital after being internally bootstrapped. The investment coincided with the company relocating their headquarters to Atlanta, Georgia. It was stated at the time that the funding would be used to help advance Bitcoin processing.
In June 2013, BitPay received an additional US $2 million venture capital investment led by the Founders Fund. A Tech Crunch article stated that the investment would likely be spent on staffing, with a number of coding specialists required around that time.The funding was seen as an attempted push to become more global and was seen by some as a larger VC [and grab for Bitcoin companies. The Founders Fund investment was overseen by Peter Thiel, who was Facebook’s first major investor. It was said the investment came from Thiel and Founders Fund, because he saw how BitPay could help ease online commerce across borders.
In December 2013, Hong Kong business magnate Li Ka-shing invested through his Horizons Ventures firm about $2.7 million into BitPay. At the time of the investment he was seen as the richest person in Asia.
In May 2014, BitPay received $30 million in funding from investors including Index Ventures, RRE Ventures, Virgin Group’s Richard Branson and Yahoo founder Jerry Yang.
Sponsorship
In June 2014, BitPay reached a deal with ESPN Events to become title sponsor of the St. Petersburg Bowl for two years. The NCAA-sanctioned post-season college football game began in 2008 and is played annually at Tropicana Field in St. Petersburg. BitPay secured the title sponsorship after Beef O’Brady’s, who had sponsored the event since 2009, declined to renew. Rather than branding it with the BitPay name, the Bitcoin name will be used to brand the game, as BitPay intended the sponsorship to promote the technology rather than the company itself. The currency was supposed to be accepted for ticket, concession, and merchandise sales for and during the game, and the sponsorship itself was also paid in Bitcoin. However, reports from the game indicated that this was not the case. Financial terms have not yet been disclosed.