Square Patent Could Remove Crypto Payment Hurdles

Digital payment provider Square Inc. has been granted a patent for a payment network that would allow merchants to accept payments in any currency – including Bitcoin (BTC), Ethereum (ETH), or any other crypto coin.

The San Francisco-based company filed for a patent in September 2017 regarding a system that supports cryptocurrencies in addition to traditional payment methods. On August 21, the U.S. Patent & Trademark Office (USPTO) published approval documents for Square’s application.

“The present technology permits a first party to pay in any currency, while permitting the second party to be paid in any currency. In this way, the technology provides benefits that removes barriers to transactions that might inhibit international commerce, or commerce with certain types of currency.”

Square’s technology would allow merchants to see when clients are trying to pay with cryptocoins, and choose whether to accept the transaction in a currency of their choice. It will also require users to have a wallet to keep track of off-chain balances and transactions on a private blockchain.

While Square is not the first company to come up with such a system, the company has a deep market penetration that will help merchants adopt cryptocurrency options more easily.

Notably, the patent proposes a solution to Bitcoin’s long transaction times through a private blockchain that records transactions from Square-managed wallets in real time. According to the proposal, POS devices will store transaction information such as cost, time of transaction, location, and identity of customer off-line, and then provide it to the Square through an internet connection.

Although this method does not completely prevent “double spend attacks”, the risk is mitigated from the merchant to the payment service. However, Square already has tremendous market penetration, so adding cryptocurrency payments to its present POS system would allow millions of merchants to accept bitcoin without having to onboard to another payment processor or manually convert cryptocurrency funds into fiat.

According to the patent, the lack of widespread adoption of cryptocurrencies can be attributed to factors such as price fluctuations, significant transaction latency, and the anonymity of crypto coins holders, among others.