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Lightning Payment Gateways are here. Join us as we explore this new development in the Bitcoin ecosystem. Are Lightning Payment Gateways the way Bitcoin gets to the next billion people?
Before hyperbitcoinization strikes, Lightning Payment Gateways could pave the way for the main event. These new services work as an intermediary or interface with the banking payment system, a concept that might have been frowned upon by some bitcoiners not too long ago. However, Lightning Payment Gateways solve problems.
The main benefit these services provide is undeniable: merchants can accept Bitcoin and their business model doesn’t have to change. The Lightning Payment Gateway serves both parties from behind the scenes; the buyer spends BTC and the merchant receives Fiat money. That means the app also solves the foreign exchange market problem.
Tourists, for example, could just download a Lightning Payment Gateway app and pay using Bitcoin while the receiver gets the local currency. Of course, Bitcoin is global money; it would be more convenient if everyone accepted it everywhere, but that’s not reality. While we wait for the world to catch up, Lightning Payment Gateways can bridge the gap.
Now, if the user is not a tourist and is plugged into the country’s banking system, Lightning Payment Gateways could connect said system to Bitcoin. A user could cheaply swap BTC for the local currency and then use an ATM to receive cash. It also works in reverse, users could easily receive or acquire Bitcoin if they so choose. These processes are much cheaper than using international bank transfers or Bitcoin ATMs.
Lastly, there’s the remittance problem. Bitcoin has already revolutionized the remittances market, but the process is still complicated and expensive. On one end of the transaction, there’s probably an older person who has to deal with the complexities of the Bitcoin network. Potentially, we could solve that problem using Lightning Payment Gateways. The remittance counter party could just use the app and let it deal with the difficult part.
By that same logic, users could use Lightning Payment Gateways to send money to their nocoiner peers. Some people aren’t willing to learn how to use Bitcoin yet, and that’s fine. Send them sats through a Lightning Payment Gateway, and they’ll receive the local currency. A win-win situation.
To help everyone navigate this new development, Blink created an off-ramps world map featuring the pioneering Lightning Payment Gateways. Let’s explore the peculiarities of a few of them, but first…
Technology is advancing, but at the time of writing, most of these Lightning Payment Gateways need a separate Lightning wallet to function. They take care of the dirty work and generate a Lightning invoice, but you need a wallet to pay it.
And we say “most of these,” because Blink teamed up with Money Badger to simplify the process:
“Blink has improved this experience through a new integration. Now, users can scan the QR code directly from their Blink wallet, which simplifies the payment process significantly.
Instead of navigating through a second app and selecting Bitcoin manually, the wallet can interpret the scanned QR code as a Lightning Invoice.”
Pretty soon, this will be the norm. Until then, let’s keep our promise and explore some of them.
One of the main ways Lightning Payment Gateways interact with the fiat banking system is through money services in mobile phones. In Kenya, that service’s name is M-PESA, and the country’s Lightning Payment Gateway of choice is Tando.
All M-PESA accounts are tied to a phone number; put it in as a receiver in the Tando app and you can send Kenyan shillings to it. The app will create a Lightning Network invoice with the amount you want to send, pay it, and you’re good to go. Reportedly, the whole transaction just takes seconds.
According to Tando, their service is cheaper than a regular M-PESA transaction. “You will save money when using Tando compared to M-Pesa. Tando covers all transaction fees as a way to incentivize more people to transition to a bitcoin standard.” Of course, this policy might change because covering transaction fees could not be sustainable in the long run. However, remember this: the Lightning Network’s fees are extremely cheap.
Also available on Tando’s website, the service’s reason to be:
“Through our boots-on-the-ground research we learned that most people in Kenya were more interested in using bitcoin as a Medium of Exchange (MoE) first, and Store of Value (SoV) second, which is the reverse of how most people in The West typically use bitcoin.”
Interesting insight that makes us wonder: What do the countries present in Blink’s Bitcoin Off-ramp’s map have in common?
Even more plugged into the banking system, Swapido connects Bitcoin to debit cards and Mexico’s mobile money service, Dimo. Through Dimo, users can attach their mobile numbers to their bank accounts and receive transfers via SPEI, Mexico’s electronic payment system. Users can also send BTC and have the recipient receive Fiat money using their CLABE bank account number or even a debit card number.
The service launched in October, and in February, they celebrated their first whole BTC in transaction volume.
It’s important to notice that Mexico is the second biggest remittances market in the world, and Blink already stated what Lightning Payment Gateways can do for the remittances market.
This Lightning Payment Gateway is special for Blink, keep reading to know why. According to Bull Bitcoin, “over 90% of Costa Rican consumers use SINPE, a phone number-based payment network, which means that almost every Costa Rican now has access to a low-cost, secure and instant Bitcoin on-ramp and off-ramp.”
It also means that everyone can pay merchants and send money to individuals using BTC. As Amboss’ Jesse Shrader explains in the following tweet, “They receive Colónes in SINPE (Venmo of CR), I spend BTC. The reverse is possible as well where I can receive BTC.”
How does Bitcoin Jungle factor in the equation? Well, “The Bull Bitcoin service is currently only available to users of the Bitcoin Jungle wallet. Bitcoin Jungle is an open-source community project which allows Costa Rican businesses, farmers, artisans and professionals to easily accept Bitcoin payments.” This is special to Blink because the Bitcoin Jungle Wallet was originally a Blink fork. Kudos to them!
As with Bitcoin Jungle, another Bitcoin circular economy is responsible for this project. To connect with the Mobile Money system, Bitcoin Dua created BitSpenda:
“At BitSpenda, we make it easy to spend Bitcoin across Africa. As a subsidiary of BitcoinDua, we bridge the gap between Bitcoin and Mobile Money (MoMo), allowing users to convert and use Bitcoin instantly.”
This Lightning Payment Gateway is originally from Ghana, but it also works in “Nigeria, Togo and some other Africa countries to be mentioned later.”
This phenomenon is just beginning, but there are already multiple iterations, with more popping up soon. Let’s quickly explore Asian and European Lightning Payment Gateways:
Also, while Blink worked on this article, a new African app inspired by Tando launched:
This might be the way to bring Bitcoin to the next billion people. Lightning Payment Gateways enhance Bitcoin’s utility by allowing people to pay with BTC in places where merchants only accept Fiat. Instead of cashing out to Fiat through a bank or payment app, users can transfer value directly using Bitcoin, reducing friction and bypassing traditional exchanges and/or OTC services.
Check out Blink’s ever-evolving map of available Lightning Payment Gateways on our off-ramps pillar page.
