Legalizing cannabis is in full swing at the state level but still has a long way to go at the federal level. This gives a good reason for banks to categorize the entire cannabis industry as a “High-risk” business and make it hard for customers to use their credit cards. Of course, this creates a lot of friction at the checkout for new customers trying out for the first time, but the banks and credit card companies do not care.
All other alternatives that exist today create some friction. For example, cash, ATMs, and cashless ATMs are some of the options available today. However, this requires customers to use their debit cards, payout $5 or more in transaction fees each time, and often result in declined transactions as the card processor deems it as “high risk.”
Some have tried using Bitcoin and other crypto-assets at checkout, but they come with their own set of problems, such as
- Volatility: The price of bitcoin is very volatile, and recently it has seen a price swing up to 50% within a week. So if you are accepting bitcoin payments and loses 10% to 15% by the time you convert into $$, that eats up the sale and the profit.
- Slow confirmation time: All layer 1 crypto transactions are tracked on a blockchain which is a global register. You will need to pay for the transaction cost and typically wait for 10 mins to 1 hour before the transaction is confirmed on the blockchain. Good luck in making customers wait for an hour to finish the transaction.
- Taxes: In the United States, bitcoin is taxed as property, and spending bitcoin in exchange for any good, service, or currency is a taxable event, plain and simple.
- Customer friction: Imagine the customer trying to convert the $$ price to bitcoin price at the checkout counter and punch in the numbers correctly. Disaster..!
- Technology experience required: To accept Bitcoin payments, you will need to run your own node, set up servers using BTCPay Server, and then accept payments.
With all these above issues, you may ask how in the world can we use the Bitcoin Lightning network to accept payment?
Let me take the time to explain how all this comes together to provide a seamless customer retail experience.
Strike App is built on the Bitcoin Lightning Network, the layer 2 solution built on top of the bitcoin network. The strike did a great job of hiding all complexities from the user—no volatility, instant confirmation on transfer, and no tax implications. Using Strike App is the same as using Venmo or PayPal or Square-Cash App. Download the App, connect your debit card or bank account, and instantly transfer money into Strike App. Strike holds this money as dollars; hence there is no volatility. Furthermore, because Strike App is built on an open Bitcoin lightning network, it can not only transfer money between Strike users; it can instantly transfer money between any lightning wallets built on top of the Bitcoin lightning network.
Jack Mallers, CEO of Strike, explains this clearly in an article with a customer story from a cannabis store, Helping Hands Herbals, in Boulder, CO, USA. According to the article, they put up signs to download the App, gave an initial discount of 10%, and boom, many started using it.
Strike being used at Helping Hands Herbals in Boulder, CO, USA
Strike has done a great job hiding all complexities for the end customer and making it usable. However, while Strike can also be used on the retail business side to take payments, it lacks much functionality required to make it usable.
This is the reason we created the PaySea hardware terminal. It takes a similar approach to Strike by hiding all complexities, built on the same open Bitcoin Lightning network, and transacts payments in dollars. However, it also provides other benefits such as a dedicated hardware terminal with a bigger display, integrated with Point of Sale systems, and the ability to reconcile payments and integrate with accounting systems.
Here are the top five features:
- Plug and Play: Power up the terminal, and you are in business. The goal was to hide all complexities of setting up crypto wallets, connecting to a lightning node, open payment channels, and other technical difficulties. We were able to accomplish this goal by utilizing a cellular-connected, always-on tablet-like touchscreen device.
- 0% transaction fee: Yes. You read it correctly. We do not want to charge fees on each transaction and chip away your profit. You pay a simple fixed subscription fee, and every payment we collect will be pushed to your bank account shortly.
- Integrated with Point of Sale system: We can quickly integrate with your existing point of sale system to easily show the checkout amount on the payment terminal for a touchless and fast experience.
- Accept payment from any wallet that supports lightning network: Not just Strike wallet App, but you can accept payments from a growing number of other Apps out there built on the lightning network.
- Faster, cheaper, private, open financial network ready to take off: The payments are settled instantaneously and private. Transactions are secure, and we do not hold them against you or decline transactions just because we can do so.
Still, have questions? See the demo in 30 seconds of how Strike App and PaySea payment terminal work together:
Over the past three years, I got to see how Bitcoin Lightning technology was built from scratch. Building an open and inclusive financial network is hard. The technology has come a long way, but it is here now, and the product is ready for mainstream adoption. The community is growing strong every day, and new tools are being built at a tremendous pace. The incumbent banks and credit card companies can continue to think that they are the only game in town, charge higher fees, declined transactions, and do not worry about customer experience. But not for long. We do not want to repeat the same mistakes. The new system is built to be open. Not one company or one product can monopolize and set rules. One company cannot charge higher fees just because it can. Above all, every customer has been treated equally no matter their type of business and history.
Only within this decade, the cannabis industry started operating in a few states and growing strong. There are many more states being added to the list. It is our collective responsibility to build a foundation that can be adopted easily by the newcomers. I request that you spend time on this new lightning payment technology and help us take these products and tools mainstream.
We are furiously building our first 100 units to be deployed at retail locations. If you want to be one of them, please go to https://paysea.net and join our waitlist.
As always, I love to get your feedback and questions. You can reach me at [email protected].
Learn how PaySea payment terminal can solve Cannabis retail payment issues
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