Mainstreaming Lightning: 3 Practical Options for Merchants
Our goal is to liberate the world from inflation, the heteronomy of (central) banks, and monetary hierarchies that equate money with power — to bury fiat. We’re building a decentralized, P2P, flattened world. But to change the monetary world, we first need to understand it.
Think about your last few fiat transactions. Buying groceries? Picking up dry cleaning? Buying some DLC in your favorite mobile game? Let’s consider two aspects of these transactions:
- Transaction fees of even a few bucks are unacceptable for such everyday microtransactions, as are confirmation times anywhere near 10 minutes.
- At the other end of each of those transactions, there was a merchant.
These two observations lead to two corresponding conclusions:
- Lightning is the only technology that fulfills bitcoin’s promise of flattening and liberating the financial world fast enough and cheap enough for real-world transactions.
- Merchants need practical solutions to get started and active in the Lightning economy.
The good news is that there is a vibrant community actively developing merchant solutions for Lightning, generating choice, competition, cross-fertilization, synergies, and all that good stuff. However, incoming merchants might be unaware of, or a little overwhelmed by, the options available to them. So here we explain three practical tools for merchants to start accepting bitcoin over Lightning: OpenNode, BTCPay Server, and the Breez POS mode.
OpenNode: plugging in to a 3rd-party payment platform
Tl;dr: OpenNode provides an easy custodial solution for merchants to start accepting Lightning payments.
OpenNode was launched two years ago, and they say that it’s “the easiest way to accept bitcoin.” They are making an honest effort to deliver just that. OpenNode offers merchants the ability to accept bitcoin payments via link, via payment buttons on the merchants’ websites, or via a branded solution using their API.
It’s also versatile. With OpenNode, merchants can set their prices in >190 different currencies, and they can convert their balances into 8 different fiat currencies, including USD, GBP, and EUR in order to deal with bitcoin price volatility.
Unlike credit card companies, and since we’re talking about bitcoin, OpenNode prevents chargebacks, saving merchants time and hassle. Cost is another advantage over credit cards. With fees of about 1% per transaction below $1000, OpenNode is also significantly cheaper than credit cards on average, especially for card-not-present (i.e. online) transactions. While such a fee structure improves on fiat, it remains higher than standard on- and off-chain fees.
Of course, there’s a catch … or two. First, OpenNode is a custodial payment processor. Instead of giving merchants ownership and possession of their money, which is indeed one of bitcoin’s principal advantages over fiat, OpenNode maintains possession and control over merchants’ funds. While this transfers some of the technically demanding work from the merchants to OpenNode, it also requires them to trust OpenNode … just like they currently have to trust their banks.
The second catch are the demanding KYC/KYB requirements. Since OpenNode acts like a payment processor, they are subject to exigent regulations. For business clients — merchants — OpenNode requires a photo along with proof of address, proof of legal existence (e.g. the certificate of incorporation), and proof of ownership, which might even include the shareholder registry or trust agreement.
BTCPay Server: this battle station is fully operational!
Tl;dr: BTCPay Server delivers the most functionality with unimpeachable integrity, albeit at a cost in configuration and hardware.
Whereas OpenNode started conventionally by fitting a product to an emerging market, BTCPay Server started with a brave user’s wrath. In brief, BitPay posted some controversial claims about SegWit, and Nicolas Dorier vowed to bury them. (If you like iconoclasts, you’ll love Nicolas, as do we. We’ve mentioned him before.) BTCPay Server is his shovel.
BTCPay Server is for merchants who have bitcoin in their veins. In effect, it lets merchants become their own bitcoin bank, giving them full autonomy with their own node running on their own server. If Satoshi Nakamoto decided to come out of retirement and open a chain of noodle bars, he would process his payments with something like BTCPay Server.
Using BTCPay Server to run their node, merchants are liberated from intermediaries like banks and custodial services. Such autonomy brings a few further advantages:
- There are no KYC requirements, which only apply to third-party payment processors.
- Merchants save on fees, paying only mining/routing fees directly on the network.
- Merchants gain control (and responsibility) over the privacy and security of their funds and transactions.
Yes, this does require merchants to set up their own server. A Raspberry Pi will do, and how-to guides exist, but it does take some skillz. This is a more complicated operation than setting up another email alias. But running a bitcoin node with BTCPay Server is good for the network, good for the bitcoin economy, and good for the merchant.
Of course, it’s not all toil and sweat. BTCPay Server hasn’t reached >100,000 downloads for nothing. It also offers merchants great configurable features. BTCPay Server supports every Lightning implementation worth naming: lnd, c-lightning, and Eclair. It has a point-of-sale app and — just like OpenNode — payment buttons that merchants can embed on their web pages. It even works over Tor.
If BTCPay Server can’t do it, you probably don’t need it.
Breez: mobile Lightning for merchants too!
Tl;dr: Breez is a Lightning-only, non-custodial, zero-configuration, physical, mobile POS solution — all the adjectives a merchant will ever need.
Breez started the way a lot of great startups do: a few guys saw the potential in a new technology and decided to introduce it to the world. That tech is Lightning, which is all we do. Since Lightning is all that bitcoin yet needs to become the world’s currency, and we love bitcoin, we focus on just that one thing.
We started with a P2P, Lightning-only, general purpose app. But we soon noticed that our users were deploying the app in different ways. Some had started using the general purpose app as a point-of-sale device, so we heeded their needs, digested their feedback, and developed a POS mode. Switching to POS mode requires nothing more than the slide of a thumb.
Once the POS mode has thoroughly proved itself in beta, we might spin it out into a standalone app. Either way, it will remain true to Bitcoin’s principles of user sovereignty, mobility, and preserving users’ custody.
The Breez POS mode is a bitcoin-based, Lightning-only cash register that can be used anywhere. The point-of-sale mode contains what merchants need to join the Lightning economy while keeping the configuration burden to a minimum. They can easily compile a catalog of their inventory, making it easy to find whatever item is currently going through the till. Users can also set the app to display prices in up-to-date fiat rates to ensure that they’re not overcharging their customers (or underpaying themselves). With Escher’s help, we offer US merchants an instant fiat-to-Lightning conversion.
Breez also integrates LNURL-channel to increase incoming capacity. This protocol allows merchants to use external services like Bitrefill, LNBIG, and other LSPs to open additional channels simply by scanning a QR code.
Breez delivers the mobile Lightning solution that merchants need without compromising on custody or convenience.
Don’t forget the merchants!
In our efforts to jumpstart the Lightning economy, it’s easy to focus on the customers (user base!) and forget the merchants. But merchants are the other half of the equation. They’re the ever-present counterparty, and they have needs too.
OpenNode, BTCPay Server, and Breez are three functional, practical options that have already reached a pretty advanced stage of development. They address three different types of merchant-user: those who just want a quick and easy solution, but aren’t too worried about fees or what’s under the hood; the maximalist merchants who want to do their part to bury fiat; and the merchants who want to start accepting Lightning payments with an app on the mobile devices they already own.
We may be taking different paths with different vehicles, but our destination is the same: onboarding merchants to the Lightning economy.
