PayStand is a payment processing service that takes the fees out of Credit Cards and enables eCheck and Bitcoin payments for a monthly fee. They recently announced that they are helping about a dozen candidates and politicians in New Hampshire accept Bitcoin donations for their political campaigns.
PayStand's CEO Jeremy Almond took some time out of his busy day to answer some questions for us about politicians accepting Bitcoin, merchant adoption and the future of e-commerce.
CoinTelegraph: Can you give us a quick rundown of PayStand and what it does?
Jeremy Almond: Yeah sure, Paystand is an online merchant payment processer. So we are a nextgen payment gateway that allows organizations to accept payments through the website or application or their mobile front. We are unique in a few key areas: number one, we enable different forms of payments. We have the usual suspects of card services, so VISA, MasterCard, American Express, alongside newer things like bank networks, check 21, and digital currencies or Bitcoin processing.
So you can kind of think of us as the first company to bridge the gap between traditional processing and Bitcoin. We are big believers in Bitcoin and want to help merchants easily integrate it alongside their everyday, traditional payment methods.
We are big believers of Bitcoin and don't charge anything for Bitcoin transactions. Our view of the world is that digital currencies really create innovation on the payment side of things.
Our company works as a payment for a service. So, there is one flat monthly fee and it doesn't matter how much Bitcoin a company processes, it could be US$10,000 or US$10,000,000 - we don't charge them.
CT: But they do have to pay the Bitcoin miner fee?
JA: Well with our system, there is still an exchange fee if they want to move it back to dollars, which a lot of our merchants are mainstream merchants, so they typically will receive the money in digital currencies and switch it to dollars. There is still an exchange cost with that because we can't completely get rid of all the processing fees that we would have to pay on the processing side.
We do take care of the mining costs and back end structure. So whatever the Bitcoin exchange rate is at the time, then that is exactly the amount of Bitcoin they get at the time of sale.
CT: I do want to talk more about merchants, but moving temporarily to the big news: You have about a dozen New Hampshire politicians and candidates in line to accept Bitcoin payments through you is that correct?
JA: Yeah, we have about a dozen or so already signed up, active and using it. Then we have quite a bit more that are in the pipeline. I think it’s creating an overall ecosystem but this is an exciting thing because the election cycle runs every few years but the big technology trends tend to get adopted during election cycles.
Whether that is the internet ten years ago, fifteen years ago, that changed the communication process or how social media changed how they run election cycles. Now digital currencies, I think, have reached the tipping point in the mainstream enough that we are seeing it really become a part of the election cycle this year, which is really exciting in my opinion.
“Now digital currencies, I think, have reached the tipping point in the mainstream enough that we are seeing it really become a part of the election cycle this year, which is really exciting in my opinion.”
So we have some early thought leaders in New Hampshire that already got on board, including some of the first sitting representatives taking it. And then other states started following quickly. Part of that is that the political landscape in terms of regulation is starting to tip in positive ways which has put a lot more trust in the system. So, you are getting the thought leaders of the political space really starting to take a bat on it now, which is a great sign.
CT: Was the lesser regulation why you focused on New Hampsire? Why New Hampshire and not another state?
JA: Yeah, New Hampshire generally has a philosophy that digital currencies have a sort of alignment with it. To be honest, the technology teams for quite a few representatives in New Hampshire contacted us first.
One of the things in general that has gained a lot of traction is non-profits and online giving. There is a lot of philosophical alignment with us and non-profits. One thing is that when you give US$100 online. The reality is that with card networks when you receive money through an online donation, it is usually US$97. So from a philosophical standpoint, non-profit organizations really started to use our system in droves. That is a small world and more and more companies have started using us.
Then we started hearing that the politicians were interested in our system as well and the New Hampshire folks contacted us first. They are really the first state of a number of states that are now getting on board.
CT: Do you plan on helping out international politicians? There is a Swedish politician accepting Bitcoin, and only Bitcoin, for his campaign.
JA: Yeah, from a long term perspective, absolutely. Clearly, for Bitcoin and digital currencies in general, one of the most exciting use-cases is moving money overseas.
From a short term perspective, we as a company are really focused on the U.S. and that is because we really want to do that right and build a sort of financial backbone that is trusted and full of proof and that stuff. So this year we are focused on the U.S. and we might find that next year we will begin expanding globally.
- Mathias Sundin, Swedish politician accepting Bitcoin, and only Bitcoin, for his campaign.
CT: While Citizen United and other court rulings have greatly reduced transparency in campaign financing, what do politicians accepting Bitcoin have at their disposal if they want to be transparent? Is there a way to only accept donations from verified accounts? How is campaign reporting done when Bitcoin is used?
JA: think that is one of the areas where PayStand, because of its traditional payment methods, really has an advantage. We have a pretty deep set of reporting on the customers, so every contribution can be compliant with reporting rules, if the politician thinks they ought to.
We think that is actually really important. If someone really wanted to just take anonymous Bitcoin donations, quite frankly they could do that on their own. You don't need a payment processor for that.
Where we really help is things like that, we put value on top of the payment network where you can ask for additional information or get deep level reporting. Because frankly, it is important to make sure there are good actors in the system. From an ecosystem standpoint, we want to make sure everything is on the up and up. That is important for Bitcoin [to continue its mainstream growth].
CT: Are there restrictions on how much one individual can donate in BTC?
JA: From a guidance perspective, there was a little bit of controversy around what that was. Some of the readings were that it was limited to US$100 or less. Others read the guidance and said it could be a lot more than that. So we allow each organization to choose how restrictive they want to be. If clear regulations are announced, we will support that on our side because we want to continue building good actors in the system. But for now since it is unclear, we will allow each company, each organization and each politician to choose their own.
This is the nice thing about our system - it lets you choose caps and things like that.
CT: Moving to merchants, you also help them accept Credit Cards and eChecks. Which of the three payment methods do merchants seem most excited for?
JA: Merchants seem most excited for non-card based transactions, because those cause a real problem for them. The reality is that we are still really early in the digital currency space. What I think is great is that there is interest. We primarily deal with mainstream merchants and organizations, so for us it's about educating them. Making them realize that Bitcoin and digital currencies are really like cash online, and that solves problems with transaction fees and charge backs and other things.
So, some of the problems that the card networks have are apparent and this is because they were built 50 years before the internet. So there is excitement for something better. Looking at the normal merchant world, they may not understand the intricacies of Bitcoin, but they do understand the pain of card networks.
CT: You commonly refer to Bitcoin as “eCash” do you find that term to be less intimidating to customers than “Bitcoin” or “Cryptocurrencies?”
JA: Yeah, it depends. Our goal in the ecosystem is to play a role helping mainstream merchants and organizations understand it. Some of them, the thought leaders, are really understanding of it, and get it. For others, they don't really understand it and Bitcoin can be a loaded term for them.
For them, we say that in the real world people pay in a blend of cash, check or credit. Credit has its advantages, it is convenient, but it also has some problems. When someone hands you a hundred dollars you don't receive a hundred dollars. The great thing about cash is you actually get a hundred dollars. What we tell them is that Bitcoin is fundamentally a cash-like payment method that actually gets you your money 100 % of the time and quickly. Once they understand that concept, it doesn't seem as scary as a math based currency. It depends on the customer, but not everyone can wrap their heads around that. But everyone can wrap their heads around cash and even internet cash. Ultimately I feel that from a payment perspective, that is essentially what Bitcoin is.
CT: For those unfamiliar with eChecks can you give us a little run down on what they do?
JA: Well, unlike some in the Bitcoin industry, our goal isn't to burn down the banking industry. We find that different methods have different advantages, so it doesn't make sense to have nearly all of the transactions on the internet going through one method.
“[…] our goal isn't to burn down the banking industry. We find that different methods have different advantages, so it doesn't make sense to have nearly all of the transactions on the internet going through one method.”
Card based systems have the advantage of giving points and extending a line of credit, and that is cool. But it costs a percentage, so the more you spend the more you have to pay. That has some serious problems especially when it comes to taking donations.
eChecks have a cost but it is a fixed cost. So if you are paying bills or making a donation, they have an advantage. If you are paying a $5,000 bill or a $1,000 donation, a credit card is going to take a percent that is going to make it super expensive. So it is a good intermediary [between Bitcoin and card systems] and it has a fixed cost of 25 cents so that is dramatically lower than card purchases.
The great thing is that Bitcoin is on the other end of the spectrum at no cost, just like cash. So we think all three have a real important reason to exist in the future. Our hope is that in the future, whereas now 99 % of trade volumes go through card networks, we would like to see it go to other methods like eCash [Bitcoin] and eCheck, so we can save money and build a better system.
CT: Do you think Banks and other traditional financial institutions would be able to match or undercut Bitcoin's low transaction fee if they saw it as a threat and choose to?
JA: Again our hope, or our role in the ecosystem, is to help players like that understand that it isn't a threat - it is just a better system. So we have been working with the banks, we do traditional card processing and we are a source of revenues for those guys. But the writing is on the wall and they are aware of that.
That is that card networks aren't always the best and Bitcoin has value. Those guys understand the system isn't efficient, so I think they are slowly becoming open to working with Bitcoin in an efficient matter. I don't think that is going to happen tomorrow but we are having good conversations and I think over the course of the next couple years you will see financial institutions adopt it.
Our goal is to help them adopt it in a way that is adaptive and not in a competitive way. Not in a way that is going to suppress digital currencies but in a way that will bring on more consumers and more merchants.
CT: As a company that deals in all three online payment methods, how do you see the future of e-commerce in the next five years or so?
JA: 27 trillion dollars is moving through digital payment networks, which is primarily a kind of feed-based system. We don't think card networks will go away. When I take my wife on vacation in Bali to go surfing, I might still put that on my card because I want the reward points and miles. But when I buy Christmas presents this December, yeah, I have the money in my bank account, so the fact that it is going through the card network might be unnecessary. So we see Bitcoin as an alternative method to pay for things that are digital in a way that is more efficient.
So our hope and our goal is to see digital currency adoption have a meaningful place in the purchasing process online, which, quite frankly, isn't there yet. Your options right now if you are an e-commerce company is VISA, MasterCard and Paypal. And basically, all of those options cost you roughly 3%. So there is a huge value in digital currency that can save merchants money, which is better for the system and will create more jobs. That makes a fairer world and we look forward to helping with that.
CT: Anything else you would like to talk about?
JA: Yeah, on the fund raising side. I think it is really exciting seeing the thought leaders start taking up Bitcoin because it is just one more step toward mainstream adoption. For companies like us, we are betting on a twenty year path. It doesn't happen overnight but we can help contribute and see more and more thought leaders like the politicians in New Hampshires starts accepting Bitcoin.
I think that along with some of the bigger companies that have been announced recently. Having more places where people can spend Bitcoin in a normal way is good for the ecosystem and good for the infrastructure. We are really excited about that.
CT: Thanks for taking the time to talk to us.
JA: Thank you.
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