Design Challenge Push vs Pull Payments #122
johnsBeharry
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Payments
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In Bitcoin the payer has to initiate the payment or push it to the receiver vs the receiver being able to pull the payment from the payers account. All payments in bitcoin are initiated by the one who controls the private keys.
Pull Payments
Pros
Pull Payments are fundamental to the subscription business model, it creates a predictable cash flow for the business which is reasonable. There are also consumer benefits to Pull Payments as the UX of not having to go to each service provider in order to pay for the next period of service is certainly more convenient.
Cons
This is where the benefits end. With pull payments the payer authorises the payee to be able to take funds out of their account at the beginning of the relationship - then, subsequent payments can be taken whenever the payee wants to make a charge.
Payees take advantage of this authorisation (with credit/debit cards it usually lasts until the cards expire) and use dark patterns to capture recurring payments for a longer period of service than is usually required.
Dark Pattern: Free Trials
A trial period provides the incentive to request the initial authorisation, and the lack of central authorisation management for the payer provide the payee with the means to lock in the payer. The payer is left having to look up transactions which can have obscure memos to determine who the service provider is, then track them down and request them cancel (phone, web page, etc).
While people familiar with traditional financial services coming to Bitcoin may find its Push Payments limiting in this business model, the design of solutions is already a raising trend with challenger banks which are now providing subscription management features.
NOTE: This kind of service/tool is not new by the way, we are just seeing it becoming available to the masses. Businesses have had access to such expense management tools of their own for a few years now.
Recreating Pull Payment Flows in Bitcoin
There are potential solutions that don't require any protocol change, or trusted third parties. Just some work on the bitcoin application to keep track of renewal dates and a set of addresses or invoices to pay. The main idea, is the payer authorises first, and this authorisation can even be scheduled and batched.
We can also take this even further - e.g. pay per use but it's out of scope for this discussion but we should have alignment that:
Research & Design Challenge
How might we manage/approve subscription payments in a lightning or on-chain app so that the customer is not forced to visit each site to scan a QR code for renewal. It's a design challenge ripe for bitcoin designers, and we should try to solve if we do not want to recreate the same problems with pull payments as friction drive demand by payers.
Questions
Opening this up for discussion so we can explore this topic together.
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