PEY is a new company based in Hanover, Germany that is using Bitcoin to help local merchants accept electronic payments, reported VentureBeat.
Consumers in the city always have to carry cash, as credit cards are not commonplace in Hanover as they are in the US, and merchants are charged high fees to accept debit cards. Entrepreneur Ricardo Ferrer Rivero wanted more options, and rather than work with banks, he decided that getting merchants on board with Bitcoin could be a workable solution, said VentureBeat.
Rivero brought together a few local developers, industrial designers, and technology to produce a 3D-printed Bitcoin terminal that does not cost a thing to operate.
Asking merchants what it would take for them to accept Bitcoin, Rivero learned their key concern was that working with the digital currency would be too complex and that Bitcoin was too volatile. After contemplation and speaking with friends about the project, Rivero’s idea was to create a Bitcoin standard that every wallet could integrate with, offering ease-of-use to consumers, as well as simplicity and low risk to merchants.
Using old Google Nexus 7 phones, Rivero and his friends installed a new version of Android and then tailored the software and hardware. VentureBeat reported that BitPay agreed to work with the team as the payment processor and also created a customized system for Hanover’s merchants that mitigated risk from Bitcoin price fluctuation.
What needed fine-tuning was the customer experience. In order to get Android phones enabled with near field communication (NFC) to communicate with other NFC devices, they had to be put back to back, a process Rivero called “kind of awkward,” said VentureBeat.
He and his team later reconfigured the device so that the merchant could enter the price of the item, and build a surface where the consumer could easily approach with their mobile phone and tap to have the transaction information transferred over. It worked, despite being a “crude hack.” Meanwhile, the industrial design team had developed 3D-printed housing for the phone.
VentureBeat reported that while PEY was in the middle of tweaking its terminal, Apple Pay- Apple’s NFC-enabled mobile payment platform – rolled out, which raised Rivero’s expectations for how his project should be.
“We wanted to reach that standard of usability,” Rivero said. “But I noticed it wasn’t going to be possible through the normal channels.”
To get an effect similar to Apply Pay, Rivero and his colleagues installed an iBeacon on terminals. In a blog post about PEY, BitPay said the iBeacon technology will send PEY app users a notification to let them know the merchant accepts Bitcoin. With a single swipe from the phone’s home screen, the PEY app will load, prepared to complete the transaction. The terminal transmits payment information through NFC, or the user can scan the QR code generated by BitPay to complete the transaction.
So far, 50 merchants in Hanover have agreed to accept Bitcoin, and a dozen terminals have already been installed in stores, reported VentureBeat. Rivero would like to see that number grow to 100. Merchants have an incentive to participate, as PEY is giving the terminal and its software away for free, as well as providing Internet connection.
“We currently charge no fee, basically because we see ourselves as a hardware company,” said Rivero to VentureBeat. “So we’re giving it to people and trying to learn from it.”
Eventually PEY plans to sell the terminal – or possibly lease it – but it is still working out the details. Meanwhile, the company is developing a beta ecosystem where it can test and tweak until it is ready to launch a finished product. Looking to raise capital, PEY is already working on a next-generation version of the terminal built on Raspberry Pi, which BitPay said in its blog would make the technology as widely available as possible.
“In Hanover, Pey has the potential to solve the problem of enabling cashless transactions without having to change the region’s existing banking infrastructure,” said VentureBeat. “If Pey can target more regions like Hanover, it may have some real potential to grow.”