Payment MEMO as a Key Technical Aspect of Transaction Identification when Using Cryptocurrencies in Ecommerce

Different Techniques and Methods of Payment Identification in Ecommerce. Learn how to make, receive, and track crypto payments in Ecommerce correctly and why it is essential.

Introduction

For business owners accepting cryptocurrencies, understanding the intricacies of transactions in various currencies, such as Binance Coin (BNB) and Bitcoin (BTC), is crucial. In this article, we will delve into the relevance of using MEMO in BNB payments and why unique addresses are employed for the same purpose in Bitcoin transactions.

This topic is especially important when using non-custodial gateways, for example, such as Bcon Global.

Issues at Hand

Even with traditional payment methods like bank transfers, business owners may struggle to identify the source of a payment. Clients often forget to provide payment notes or order numbers. Automated systems, such as banking acquiring, simplify this process as they automatically deduct the required amount from the client, knowing which order the payment corresponds to.
Using cryptocurrencies adds complexity since they offer a degree of pseudo-anonymity. Sender names are not visible, and memorizing wallet addresses, typically consisting of 26-35 characters (or up to 42 characters for SegWit addresses), can be challenging.

Example:
Imagine a customer placing an order in your online store for $10. If, at that moment, only one customer is on the site, and only one invoice is generated in the database, you can confidently associate the payment with that customer. However, when multiple users want to buy items for the same amount, distinguishing who paid the invoice becomes challenging. Moreover, if someone sends an incorrect amount or fails to send funds at all, determining the sender can be difficult.

In this article, we will explain how to easily identify payments in Ecommerce for BTC and BNB blockchains. We will describe two technical solutions to help you structure invoices to discern payment purposes and payers.

Part 1: MEMO in BNB Payments

Binance Coin (BNB) provides a unique opportunity to add MEMO to transactions. MEMO is a short text message included when sending funds. In the context of Ecommerce, where business owners deal with a high volume of transactions, the use of MEMO becomes a key factor.

Advantages of MEMO for Business:
Identification of Payments: MEMO helps unequivocally identify from which client a payment has been received, crucial for merchants handling numerous orders.
Enhanced Reporting: Business owners can easily generate reports relying on MEMO, simplifying financial accounting and analysis.
Increased Order Processing Efficiency: Accepting payments with MEMO reduces the likelihood of errors in order processing, as each transaction is clearly linked to a specific order.
Example of Using MEMO in Ecommerce:
Generate a unique payment note, such as an order number or a generated number. When creating an invoice, ask the user to include a payment note.

Drawbacks:

1. Technologies and functionalities of different blockchains and wallet programs vary significantly. You may need to explain to users how to add a payment note using BNB.
2. Not all cryptocurrency wallets support MEMO. However, many wallets designed for Binance Coin provide this functionality. Examples include Metamask, Trust Wallet, Binance Wallet, and Ledger.

Trust Wallet

At the time of writing, Trust Wallet supported MEMO when sending BNB by default.

MetaMask

For Metamask, you may need to enable this option in the settings.

In the block and transaction explorer, you can view the Memo in the corresponding field. MEMO is written to the blockchain, so if you lose any information, you can review all transactions associated with your wallet and locate the needed ones based on their payment note.

www.bscscan.com

Part 2: Unique Addresses in Bitcoin

Bitcoin, in turn, does not provide a built-in MEMO mechanism. Instead, to ensure transaction uniqueness, unique addresses are often used.

Advantages of Unique Addresses for Business:

1. Transaction Privacy: Using unique addresses increases the level of privacy, making it more challenging to trace transactions on the blockchain.
2. Complexity of Tracking: Unique addresses complicate the process of tracking fund flows, enhancing transaction anonymity.

Example of Using Unique Addresses in Ecommerce:

Business owners can generate new Bitcoin addresses for each order or even for each customer. This reduces the possibility of tracking the financial history of the store and enhances customer privacy.

What is Xpub

The xPub key functions as the primary key responsible for deriving all your addresses. Opting for a consistent address for every transaction exposes the balance of that address to each new user conducting a payment, compromising the level of privacy.

By employing an xPub key, a unique address is generated for every new invoice and online store payment, ensuring that each transaction corresponds to a distinct address. This not only safeguards your personal privacy but also enhances the sender's confidentiality.

Furthermore, xPub Keys provide the following benefits:

Improved Privacy: Reduce address reuse on the blockchain, preserving your privacy.
Seamless Invoice Generation: Generate new invoices without the necessity to open your wallet to check new wallet adress.
Comprehensive Wallet Balance: Easily check the balance of your entire wallet instead of inspecting individual addresses.
Secure Private Keys: Safeguard your private keys within your wallet, in contrast to centralized services where you surrender control of your private keys.

Possible Issues

But just like in the case of MEMO, not all wallets support the function of generating a new address. This functionality is primarily found in open-source solutions, while custodial wallets are mainly oriented towards the convenience of coin exchange and multi-blockchain support.

As not all wallets support proper functionality for working with the public key, you may encounter a common issue. For example:

You will be provided with a public key to generate wallets, but the ability to view balances and addresses will be limited, as the program will display only a single, static address.
Read about which wallets are best to use and how to find the public key in them in our article.

Conclusion:

In the world of ecommerce, where cryptocurrencies are becoming an increasingly common means of payment, it is essential to understand the intricacies of transactions in various currencies. Using MEMO in BNB payments and unique addresses in Bitcoin are effective ways to ensure payment identification and maintain privacy in the realm of cryptocurrency payments. Business owners are advised to explore the capabilities of each currency and choose the appropriate method according to the unique needs of their business.