Thoughts on using Paypal for NBT/USD entry and exit

Nu community,

So, its been talked about before - Nu needs an easy entry and exit gateway for fiat. There are many issues when we start talking about using fiat…

One of the simpler ways of using fiat is using paypal. But using paypal for BTC conversion is not viable because of fraudulent claims and lack of proof of payment. The same issues arise when we talk about NBT.

However, there is a way around this: sell website credits which are redeemable for NBT or USD. The credits are traceable and enable proof of purchase. So theoretically a website could be made with a web store where users could use USD (via paypal) or NBT to buy credits. And then redeem credits for NBT or USD (via paypal).

But the next hurdle is the cost of operation. Paypal charges 2.9% + $0.3 per transaction. This would require transactions above $20 to be viable. And for for every $1 the user would only get 0.97 NBT. This is a heavy burden for Nu conversion because as a community our goal is a tight peg on USD.

There are 2 options for the site:

  • The gateway passes the burden of exchange on the user and they accept the 3% fee.
  • The Nu community helps the gateway by subsidizing its operations through grants to allow the site to reduce the fee burden.

I’d like to hear the community’s thoughts on the matter.

pass the burden to the customer, in my opinion. I’m not sure if this service would get much use, considering how low the volume is on the NBT/USD pairs.

Thanks.

My thoughts are - people one easy ways to get crypto for actual cash. And vice versa. Now you have to go through one of the gateways by linking your bank account or do a wire transfer.

But would enough people use it to warrant the cost of setting up the website and everything? I’m not super clear on all this, but does paypal take care of the KYC/AML stuff? What would it cost to set something like this up? Also, where are we storing the USD? In a paypal account? Are we selling NBT from T4 for credit in a paypal account?

It would be a business - a US based LLC.
The site would have to handle the KYC/AML stuff.
USD would be stored in Paypal and a US bank account.
Initial NBT/USD would be provided by me and any other initial investors. And perhaps the Nu community if they would accept a grant.

I’m not sure I’m comfortable with Nu keeping a significant amount of buyside funds in a paypal account that can be frozen or otherwise easily compromised.

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There’d be a hot and cold wallet. The paypal would be hot wallet. All funds would be immediately shifted to the cold wallet upon receipt.

If the community doesn’t support this with a grant - then there is no risk to the community. So nu would not have any funds at all and the funds would come from outside investment. This would simply be another exchange that everyone should celebrate.

And if we knock out half of the exchange - Nu to USD we don’t need to worry about KYC/AML. But then it isn’t much of an exchange…

So where’s the profit? Is the website also charging a trading fee on top of the paypal fee?

Where’s this kept? Another paypal account?

So where’s the profit? Is the website also charging a trading fee on top of the paypal fee?

Correct - there would have to be a fee on top of the paypal fee. The goal would be to keep it minimal - 0.2%. So the total exchange burden would be ~3.1%.

Where’s this kept? Another paypal account?

A US bank. This is how paypal works. It is tied to a bank account.

So this is from an interview with @ronny:

CT: You previously noted that your exchange is exploring “many alternative ways of payment through integrated payment service providers.” Could we expect to see something like PayPal being used toward this end in light of their big announcement?

RB: Paypal has been a pain to many merchants, and impossible for exchanges due to the allowed chargebacks, and I am sure this will continue, so we will try to see if we can get Paypal for our withdrawal procedures and forget all about deposit, similar to credit cards, as they are also accepting chargebacks which is a potential killer for business. Everybody considers Paypal a big player in the market, and they are of course. It’s just that if we can’t use [it] 100%, and the fact that they have shown before that they are ready to freeze accounts if they deem it necessary, what is the purpose then?

@nmei How does what you’re proposing get around these issues, and why is CCEDK not already doing it?

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One of the simpler ways of using fiat is using paypal. But using paypal for BTC conversion is not viable because of fraudulent claims and lack of proof of payment. The same issues arise when we talk about NBT.

However, there is a way around this: sell website credits which are redeemable for NBT or USD. The credits are traceable and enable proof of purchase.

Please see: https://www.virwox.com/
They have been taking paypal for virtual currency for years. Innumerable other sites allow you to buy site credits. Look at the market for WoW gold - all enabled by paypal. This is no different. The site is selling credits, not crypto.

My apologies if I bring up something already discussed, but aren’t there payment services that allow one to sell and buy goods with fiat but use BTC as actual payment? Aka person X buys or sells Y amount of Nubits for 500 USD and we get 500 USD in BTC instead (aka the middleman instantly uses the USD to buy BTC worth of 500 USD and transfers the BTC). If we used such a service we could set up our own Nubit web shop for buying and selling Nubits without the need for bank accounts or PayPal.

@Dhume This is about fiat. What is needed is a fiat gateway.

Not sure if we understand each other, but you want a place where customers can go to directly purchase or sell Nubits from Nu right? The problem is that we can’t use fiat but using a middleman enables customers to use fiat while we keep using BTC.

Not from Nu. I just want to see an exchange where people can easily exchange fiat for NBT (and vice versa) without having to use wire transfer.

That’s what dhume is saying. Customer pays USD, gets NBT. Nu pays NBT, gets BTC. Third party trades the USD for BTC for Nu.

How would people buy NBT with USD without paypal - or other payment gateway?

I understand exchanging NBT and providing BTC instead of USD which would relieve the burden of storing USD in paypal or a bank.

However I think people still want an easy way to get fiat out…without having to go coinbase, bitstamp, and wait for wire, ACH, SEPA, etc.

Personally I feel (I’m pretty sure I also suggested it) this would be a very smart move for Nu and I hope one that is takes before B&C Exchange go’s live. It would enable us to provide customers with the ability to converse fiat without the need for external exchanges and would make it easier for customers to trade at B&C Exchange.

I think there are several providers of this service, one is https://www.bitwage.com/

https://www.bitpagos.com/en/ provides a similar service.

I already have a hard time accepting 0.2% per trade charged by KYC exchanges that don’t insure deposits.

Paypal? It is both expensive and unreliable. Basically we pay a huge premium for them to shove all risks and liability up our own asses. Anything we don’t like about banks is twice as worse with Paypal.

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