PayFast drops BTC, blames high charges and slow transactions
South African online payments processor PayFast has announced that it will discontinue its support for SegWitCoin (BTC). The company became the first South African payment gateway to avail BTC payments in the country, but due to BTC’s inadequacies, it has ended support for crypto payments. PayFast will end support for BTC starting midnight on July 20.
In its blog post, the company blamed its decision on BTC’s high transaction fees and slow transactions which make it a poor substitute for cash. It stated, “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.”
South Africa has been a quick adopter of cryptocurrencies. A study earlier this year found the country to have the highest percentage of internet users who own cryptos at 10.7%. The global ratio stood at 5.5%. This perhaps comes from the dire income inequality in the country which is the highest in the world. Nevertheless, the people of South Africa have taken to crypto, and PayFast recognized an opportunity and capitalized on it.
However, supporting BTC was unsustainable, the company stated.
PayFast had partnered with Luno, a crypto trading platform which acted as an intermediary between the buyer and PayFast. To eliminate the price volatility, Luno locked the BTC to South African rand exchange rate for 10 minutes as the exchange took place. As it turned out, this wasn’t enough time as BTC transactions take longer. Due to its inability to scale and meet the growing user base, BTC transactions take upwards of 15 minutes, exceeding the Luno time limit.
PayFast revealed that, “Since the network (BTC) isn’t able to handle the volume of instructions at the speed required, the majority of Bitcoin transactions on the PayFast platform ended up being unsuccessful.”
Despite the failure of the payments, the users still incurred a non-refundable fee, further adding on to their frustrations. According to PayFast, “The overall slow performance and computational power consumed by the Bitcoin blockchain to validate transactions, make Bitcoin less useful currently as a means of exchange and better-suited as an asset.”
The company could eliminate all the restrictions it has faced by turning to Bitcoin SV (BSV), the only project following the original Bitcoin protocol. While BTC has been unable to scale to meet its users’ demands, BSV’s scaling ability is second to none. By February 2020, BSV will have scaled enough to exceed Mastercard and Visa’s average transaction capacity.
Transaction speed remains a great impediment to the use of BTC by merchants. In contrast, merchants who switch to BSV enjoy extremely fast transactions, and all these at astonishingly low fees.
PayFast promised to keep monitoring the crypto space for “innovations and improvements” and to be eagerly awaiting cryptos that enable faster payments.
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