Abstract

Online payment platforms have yet to catch up with the times and are restrained by limited functionality and the lack of viable cryptocurrency solutions. PayPal and various other platforms are practical, but do not provide a full feature set designed to address digital payment requirements, inclusive of low FX costs and instant settlements.

The COTI Universal Payment System (UPS) reconciles the functionality of PayPal and other online payment gateways with that of the cryptocurrency world. COTI’s UPS provides a comprehensive payment solution that combines all existing support systems of traditional payment processors with the added value of digital assets.

This includes:

Instant payments for merchants: funds are credited to the merchant immediately and are backed by stable coins, which reduces friction and high costs for all parties by eliminating price volatility and FX costs.

funds are credited to the merchant immediately and are backed by stable coins, which reduces friction and high costs for all parties by eliminating price volatility and FX costs. Universal processing of fiat and cryptocurrency: COTI’s UPS enables buyers to choose from many popular cryptocurrencies like Bitcoin and Ethereum, as well as fiat.

COTI’s UPS enables buyers to choose from many popular cryptocurrencies like Bitcoin and Ethereum, as well as fiat. COTI-X: allows consumers and businesses to buy, sell and swap crypto to and from fiat in the COTI Pay app.

allows consumers and businesses to buy, sell and swap crypto to and from fiat in the COTI Pay app. Low fees: the COTI UPS eliminates the need for third party processors, which significantly reduces costs.

the COTI UPS eliminates the need for third party processors, which significantly reduces costs. Buyer-seller protections: COTI’s Universal Payment Solution covers physical and virtual purchases, as well as crypto and fiat payments.

COTI’s Universal Payment Solution covers physical and virtual purchases, as well as crypto and fiat payments. COTI Interest: allows merchants to earn interest on stable coin account balances within the COTI Pay app.

allows merchants to earn interest on stable coin account balances within the COTI Pay app. Prepaid cards: virtual debit cards can be used in-store (e.g., NFC Tap and Pay, or QR code payments) and online for merchants not yet accepting crypto.

virtual debit cards can be used in-store (e.g., NFC Tap and Pay, or QR code payments) and online for merchants not yet accepting crypto. COTI Pay Plugins: allow the processing of crypto or fiat payments on any online store (e.g., Shopify, WooCommerce, Magento).

allow the processing of crypto or fiat payments on any online store (e.g., Shopify, WooCommerce, Magento). COTI SDK: allows developers to add retail payment features to any application.

allows developers to add retail payment features to any application. COTI Whitelabel: enables merchants to issue their own coin and loyalty programs on COTI Pay. Merchant coins and loyalty points will remain internal to the COTI ecosystem.

Introduction

Cryptocurrencies have experienced prolific growth as of late, although Bitcoin’s utility for everyday transactions is severely constrained. While Bitcoin payment gateways are useful for simple peer-to-peer payments, business to consumer (B2C) transactions remain challenging, and the most apparent of these challenges lies in cryptocurrency volatility. This has constricted adoption amongst merchants, as the value of a payment may be worth significantly less just seconds later.

Furthermore, the wide variety of cryptocurrencies has created a network of divergent protocols, which has limited consumer adoption. Transactions are also irreversible, making all sales final with no recourse for buyers or sellers. Finally, regulation is nearly impossible because anonymity is inherent to digital currency protocols.

Shortcomings from both the traditional online payment world and the crypto sphere exacerbate one another, resulting in a vacuum of customary buyer and seller services. COTI’s Universal Payment System can fill this vacuum by introducing trust into the crypto world through buyer-seller protection and efficient crypto-to-fiat and fiat-to-crypto transactions.

For buyers, COTI’s Universal Payment System provides a built-in buyer-seller protection system, which is a first of its kind, and is designed to eliminate transaction risks for buyers transacting in crypto and fiat. Furthermore, by accepting a large number of cryptocurrencies, COTI’s Universal Payment System makes transactions simple and streamlined for buyers and removes the need for multiple wallets. What’s more, the platform enables anyone to pay with crypto, even when merchants don’t yet support crypto transactions.

COTI’s Universal Payment System solves the volatility problem once and for all for both buyers and sellers. By immediately switching crypto payments into stable coins or fiat currency using COTI-X, COTI’s internal settlement layer, merchants are protected from market volatility and enjoy the added benefit of instant settlements.

By reconciling the best features of traditional online payment platforms with the best of cryptocurrencies, the COTI Universal Payment System will be poised to radically change online payments. The platform COTI is creating can maintain trust for all parties by reducing potential risks for both buyers and sellers, while substantially reducing fees due to the platform’s peer-to-peer nature.

We’re Making Cryptocurrency Functional

Digital payment instruments in the United States and around the world consist of complicated financial settlement processes, costing merchants up to 4 percent in processing fees for purchases and involving up to twelve different entities (each a distinct point of failure). Meanwhile, losses from retail fraud in the US alone are continuing to reach all-time highs.

As it stands, the software that moves the vast majority of money around the world today still utilizes legacy systems created during the late 1970s. In the absence of compelling alternatives, consumers have been confined to the status quo. Since the creation of Bitcoin in 2008, blockchain communities have attempted to make cryptocurrencies a useful complement to traditional payment instruments like credit cards, debit cards, and cash. However, fundamental user-experience challenges, such as unintuitive QR code interfaces, complex address strings, new security protocols, and network capacity issues have hindered commercial adoption.

Various scaling solutions, such as multi-layer protocols and Proof of Stake (PoS) consensus algorithms, show considerable promise for improving the speed and utility of blockchain transactions, but create issues of complexity and incompatibility for merchants. A variety of mobile wallets are promoting cryptocurrency payment solutions but unfortunately rely on existing legacy infrastructures.

These wallets utilize virtual Visa and Mastercard debit cards with high fees and require bank accounts, physical cards and multiple tiers of centralization. Digital payments on these platforms are subject to low transaction limits (in some cases, less than $100), as well as Apple’s restrictions for NFC access on iOS devices. Justifiably, these systems have extremely low consumer adoption due to high friction compared to typical payment cards.

It is critical that cryptocurrencies become widely accepted by merchants, as is the case with traditional payments, in order to gain mass adoption. Many companies have recently developed wallets and apps that enable retail blockchain payments, but they are universally dependent on existing payment networks. The promise of cryptocurrency has not been realized due to the need for credit cards, linked accounts, and centralized payment infrastructures to facilitate purchases.

The solution to blockchain payments is to create a cross-network solution that solves merchant and consumer needs, instead of building cryptocurrency acceptance over existing networks.

COTI’s Universal Payment System represents a milestone in cryptocurrency utility for both merchants and consumers. It is the first network specifically designed to support everyday cryptocurrency payments by enabling instant, low fee transactions in-store and online.

Using a simple SDK, the COTI Universal Payment System enables developers to add retail payment features to any app, streamlining cryptocurrency acceptance for merchants and eliminating volatility exposure. It also provides instant settlements backed by a stable coin (interest-based asset), which protects merchants from clearance and settlement overheads.

While decades of retail payments confirm the pain points of fraud and processing costs for merchants, we find that consumer needs are distinctly different. Consumers evaluate payment instruments against five basic criteria: