BitPay, a bitcoin payment, and wallet service announced today they are now beginning the work to require a payment protocol wallet for all BitPay invoices. The updated requirement is an effort to improve service, and to cut down on the thousands of customer support requests every month to correct transaction errors. BitPay stated that when mistakes happen, sending refunds back to customers is a bad solution. It is costing customers time and money, and it costs merchants successful orders.
For BitPay, the protocol eliminates user error in bitcoin payments. When a payment protocol wallet interacts with a payment protocol URL, it creates an SSL-secured connection to the true owner of the receiving bitcoin address (in this case, BitPay). Instead of copying and pasting a bitcoin address and entering any BTC amount, customers simply click or copy/paste a payment protocol URL on a BitPay invoice. If their wallet also processes payment protocol, the correct receiving bitcoin address and the correct sending amount are locked in automatically.
If a user tries to send an incorrect payment amount, or if the wallet sending the payment doesn’t process payment protocol, BitPay’s servers will reject and not broadcast the transaction.
The BitPay team said:
“We can also analyze transactions to make sure an adequate bitcoin miner fee is included. If the fee isn’t sufficient to allow the transaction to confirm on the bitcoin network on time, BitPay can return a helpful message back to the wallet to let the user know. Mistaken payments will never reach the Bitcoin network.”
BitPay will be working with other wallets to see if they will implement the payment protocol. If merchants are currently using the BitPay, Copay, Mycelium, or Electrum wallets for bitcoin payments, nothing will change. These true bitcoin wallets already can process payment protocol.
If not yet using a payment protocol wallet or service to pay BitPay invoices, the user or merchant will need to move spending bitcoin to a wallet or service which can support it. BitPay will be notified exactly when the changes will be implemented.
The payment protocol defined in BIP70 (and other BIPs) describes a protocol for communication between a merchant and their customer, enabling both better customer experience and better security against man-in-the-middle attacks on the payment process.