In an unfortunate turn of events, PayFast, the first-ever online payment gateway accepting Bitcoin (BTC) in South Africa, called time on BTC payments citing fundamental technical issues in the blockchain and a hitch in user-friendliness.
- PayFast set to stop Bitcoin (BTC) payment channel on July 20th 2019.
- High transaction fees and slow confirmation times reasons for the halt.
- Merchants asked to remove any logos and references to Bitcoin.
“Unfortunately there are a number of limitations and design flaws unique to Bitcoin that make it an impractical substitute for cash, including high transaction fees and long confirmation times for buyers. We’ve tried various ways to mitigate these problems, but unfortunately, these issues are fundamental.” – PayFast Statement
PayFast Halts BTC Payments Channel
An announcement on the official PayFast blog on Friday 12th, 2019 confirms the payment service firm will stop all BTC payments on 20th July 2019, next week Saturday. Bitcoin is struggling to function as a day to day currency usable in a fast and efficient manner as the slow confirmation speeds and high transaction costs hamper adoption.
The broadcast explains that the company had tried various means to make the payment system work but to no avail, citing fundamental issues underlying the blockchain. This brought about an end to the first-ever Bitcoin payment gateway in South Africa.
The company partners with a local Bitcoin exchange, Luno exchange, acting as an intermediary between users and PayFast. Once a user pays the amount at a PayFast accredited merchant in BTC, Ludo facilitates the trade between the user and PayFast. The BTC/ZAR rate is locked down for a period of 10 minutes as confirmations take place to avoid the wild price swings of BTC.
However, in the past few months, the interest in Bitcoin has caused increased confirmation times and high transaction fees across the networks. Bitcoin’s median confirmation time oscillates reaching up to 14 minutes which caused a disruption in users payments to PayFast merchants. The report further states,
“In addition to the frustration that buyers experience when their payments fail, Bitcoin users may also incur a non-refundable fee for every attempted payment. This is the fee the network charges to process a transaction.”
This causes a payment risk on part of the buyers who may lose the transaction fee despite the payment not going through.
Bitcoin a Safe Haven Not a Currency!
Despite the continued calls from Bitcoin maximalists on the use of Bitcoin as a currency, it is becoming clearer that the digital asset is better suited as a safe haven rather than a currency. BTC is currently trading below $11,000 USD mark, signaling a further 5% dip in the past 24 hours, as at time of writing. Despite the fall in price from a high $13,700 USD in the past week, the asset is one of the best performing asset in the world in 2019 growing by 230%.
PayFast is however not abandoning the idea of crypto payments altogether. The report reads that the company is focusing on faster payment methods saying,
“At PayFast, we’re eagerly following the developments of cryptocurrencies and the supporting technologies that are aiming to enable faster payments. As soon as these become workable alternatives, we look forward to supporting cryptocurrencies as a payment method in the future.”
The move by PayFast raised different reactions from the public –some agreed with the move stating the need for a faster and better technology while others condemned the move saying the company “does not understand how Bitcoin works”. An obvious candidate to replace BTC on PayFast was suggested by the public – Bitcoin Cash (BCH).
Can BCH replace BTC on PayFast?
While Bitcoin lags behind in enabling fast payments across the blockchain, Bitcoin Cash (BCH) provides a fast payment system with penny transaction fees for PayFast. BCH is aiming to take over the ruins from BTC as its properties solve the BTC scalability and transaction speed problems. One BCH supporter aims to see BCH on the PayFast payment options. He claims,
“I have made zero payments with BTC in the past 3 years, but dozens with BCH with no issues and paying pennies in fees. If you add BCH you will have my business.”
The de-launch from PayFast comes at a time the Lightning Network, a second layer platform enabling instant BTC payments, launched the Android and iOS apps.
Author: Lujan Odera