How Square’s Bitcoin Payment Rollout Could Transform Retail Checkout

Why is Bitcoin needed for retail checkout?

With the popularity of e-commerce and mobile payments, retail checkout methods are becoming increasingly diverse. However, traditional payments still face issues such as high transaction fees, slow settlement, and complex refunds. In contrast, Bitcoin and its derivative Lightning Network payment mechanism offer faster, lower-fee, and no charge-back solutions. Recently, Square launched a Bitcoin payment service based on this concept.

Interpretation of Square’s “Bitcoin Payment + Exchange” Model

Square’s new service actually includes two dimensions:

• Bitcoin Payments: Merchants can accept payments from customers in Bitcoin, with settlement completed through the Lightning Network. Merchants can choose to receive payment in Bitcoin or fiat currency (such as USD).
• Bitcoin Conversions: Merchants can automatically convert a portion of daily card sales revenue into Bitcoin as a form of asset reserve.

This model grants merchants dual qualifications: they can accept Bitcoin as a means of payment, and they can hold Bitcoin as an asset tool.

Consumer and Merchant Actual Operation Process

Merchant side operation:

• Enable the “Bitcoin Payment” option in the Square dashboard.
• When customers check out, they choose “Bitcoin”, and the system generates a Lightning Network invoice/QR code.
• Customers use wallets that support the Lightning Network to scan and complete payments.
• The merchant backend receives payments (Bitcoin or automatically converted to USD) and the funds are available in real time.

Consumer-side operations:

• Have a Bitcoin wallet that supports the Lightning Network (such as Cash App).
• Scan the QR code provided by the merchant when making the payment, confirm and pay to complete the transaction.
• Fast payment speed, no need for traditional card payment procedures, can use Bitcoin balance.

What changes will the retail industry face?

• Faster checkout process: Especially in physical stores, transactions are completed within seconds using the Lightning Network, which is quicker than traditional card swiping + settlement.
• Fee reduction: Zero fees during the promotional period attract merchants to adopt, offering greater advantages than traditional card organization fees.
• Cross-border payments are more convenient: Bitcoin is essentially decentralized and is suitable for cross-border settlements or areas where remittances are difficult.
• Enhanced asset reserve function: Merchants can choose to hold Bitcoin, achieving a win-win model of “receiving payments and investing”.
• Changing consumer payment habits: With the increase in proportion, coin holders can spend at more physical merchants, accelerating the use of cryptocurrency in real-world scenarios.

Precautions and Strategies

Note:

• Geographical restrictions: Currently, services are mainly available in the United States (New York State is not supported), and international expansion is still pending.
• Volatility risk: If held in the form of Bitcoin, the merchant bears the risk of price fluctuations.
• Customer Education: Consumers may not be familiar with the Bitcoin payment process, and merchants need to provide clear guidance.
• Technical Dependence: The operational stability of the Lightning Network and wallet compatibility still need to be observed.

Merchant strategy suggestions:

• Initially, you can pilot accepting Bitcoin payments to help train employees and customers on the process.
• Clarify the settlement method: whether it is an instant conversion to fiat currency or holding coins, based on your own risk preferences.
• Leverage Marketing: Launch “Bitcoin Payment Discounts” to attract cryptocurrency users.
• Run in parallel with existing payment methods without the need to force a complete change in processes, ensuring a seamless experience for customers.