Merchants who accept bitcoin prefer to use a bitcoin payment processor than just use their wallet address to receive funds because it saves them the headache of keeping track of each transaction and manually exchanging bitcoin to fiat currency. Bitcoin payment processors facilitates collections of bitcoin payments for merchants and credits it either to merchant’s bitcoin wallet or converts it to fiat currency and transfers it to the linked bank account. The whole process will be as simple as accepting fiat currency over traditional payment gateways, which people have tried, tested for years and come to trust it as well.
At present, many bitcoin payment processors conduct immediate conversion of received bitcoin payments to fiat currency, to prevent variation in the value of received bitcoins due to volatility. The payments received are usually processed after the transaction receives sufficient number of confirmations on Blockchain, which may take anywhere between few minutes to hours. Once the transaction is confirmed, the payment processor will convert it to corresponding value in fiat currency and transfer it to merchant’s bank account after deducting any applicable transaction and processing fees.
Bitnet, a California based payment processor has introduced a new service that further reduces waiting time by facilitating instant approval of payments as soon as it is received. This allows merchants to receive funds within seconds of transaction. The Bitnet service is based on an algorithm that calculates the ultimate probability of a bitcoin transaction being confirmed on the Blockchain. With network propagation, Bitnet also calculates the probability of double spending.
Any transactions with a lower probability of rejection will be instantly approved, otherwise, they will be required to go through the normal procedure, waiting for confirmation from Blockchain.
The whole Bitnet merchant network can avail this new service as part of the existing payment processing solution.