Blockchain payment engine StarkPay introduces instant payments

StarkPay is a payment scalability engine based on STARK technology that offers a scalable capital-efficient non-custodial payment solution...

Stakwarepay

StarkWare, the blockchain scalability, and privacy protocol, today announced that StarkPay, a prepaid debit card-style system that offers scalable, inexpensive, trustless, capital-efficient, payments over Ethereum, now supports instant payments. With instant payments, StarkPay maintains all of its properties while offering merchants the ability to provide goods and services instantly, risk-free.

Instant Payments

Instant payment support is an improvement to StarkPay which offers merchants finality on receivables (i.e. payments received). There are no trust assumptions between any of the parties involved in a payment’s life cycle: customer, merchant, payment processor, and StarkWare which runs the StarkPay on behalf of the payment processor.

Instead of trust, the payment processor offers the merchant a dedicated on-chain security deposit (roughly equal in value to the sum total of the merchant’s receivables during a proof cycle), and counter-signs customer payments.

For counter-signed payments, the merchant is assured to receive the funds — either via the payment’s inclusion in a subsequent proof or by redeeming the payments directly from the security deposit. Much like a standard security deposit, in the normal course of affairs, it is left untouched.

Mechanism

For every merchant offered the instant payments system, the payment processor locks up a security deposit in a merchant-specific on-chain smart contract. As mentioned above, the deposit is roughly equal to the volume of payments to the merchant during a proof cycle.

Example Interaction – a customer walks into a jewelry store wishing to buy an expensive item:

  1. The customer provides a merchant with a signed payment.
  2. Merchant verifies there are sufficient funds in the security deposit contract.
  3. Merchant forwards payment to the payment processor.
  4. The payment processor checks customer has sufficient funds.
  5. Payment processor counter-signs payment and returns it to the merchant.
  6. Merchant can serve the customer instantly once it receives the counter-signature from the payment processor.

Post Customer Interaction

Note, a merchant may experience an activity exceeding the value stored in their security deposit. Accordingly, they can do one of two things:

  1. Require the payment processor to increase the size of the security deposit.
  2. Delay processing of transactions till previous transactions processed is confirmed via a proof. Obviously, this doesn’t always make commercial sense: Starbucks can’t delay the delivery of a cup of coffee for an hour, but Amazon can certainly delay the shipping of a package for an hour.

A Trustless System

In the StarkPay system, the merchant does not need to trust the payment processor (and StarkWare as a technology provider), and conversely, the payment processor need not trust the merchant.

Comparison to Lightning

In light of instant payments, the StarkWare team revisited its original comparison of StarkPay to Lightning: