Today Bitnet Technologies Ltd., an enterprise bitcoin payments processor, announced a deal with BlockCypher, Inc., a blockchain web services company, to build a service that mitigates risk for merchants when accepting bitcoin payments.

While bitcoin market volatility is mitigated by processing services that automatically liquidate bitcoins at the price point payments are made at, transaction time can still be a factor in risk. In fact, depending on how certain a merchant wants to be that a bitcoin transaction is confirmed there could be a wait of ten minutes or more.

To mitigate this wait, Bitnet will be using the partnership with BlockCypher to provide a service called “Instant Approval.”

With Instant Approval, Bitnet calculates the likelihood that a particular bitcoin transaction will be confirmed by the network. And, in the highly unlikely case that it does not, Bitnet accepts full financial responsibility for that transaction with the merchant.

The Instant Approval system also protects merchants against double-spends. A double-spend is an extremely rare event that the Bitcoin network is designed to prevent and it’s also why the wait for a number of confirmations on the network (usually six) can be expected to mitigate almost all the risk. According to Bitnet, the service uses BlockCypher’s double-spend detection and transaction propagation metrics to decide on issuing an instant approval.

“One of the biggest challenges for merchants wanting to accept bitcoin is how to accommodate the delayed confirmation times into their ‘real-time’ checkout flows and still be assured of being funded,” said Seamus Cushley, VP Product at Bitnet.

Cushley added that the partnership with BlockCypher provides the key data for Instant Approval as an enterprise-level service. Using BlockCypher’s expertise in this matter, Bitnet can offer a merchant approval in a matter of seconds.

Bitcoin transactions take longer than credit cards

With recent news about network woes with Bitcoin, merchants may feel less confident about the protocol. And with confirmation times hovering around eight to nine minutes (meaning about an hour for the fully-safe six confirmations) Bitnet’s offering would make the process much swifter.

Although, for most transactions six confirmations is overkill, since for the overwhelming majority the transaction is essentially locked down before the first. However, in industries where thousands or millions of transactions might happen, having some sort of safety net may look very prudent to merchants.

The processing company likens the Instant Approval system to making bitcoin transactions behave more like credit card transactions, such as most Point of Sale systems are designed around, which receive near-instant authorization. However, since bitcoin is on the backend, merchants will not have to worry about chargebacks or other credit-related fraud.

Bitnet hopes to use Instant Approval to offer the best of both worlds: swift payments combined with the rock solid foundation of done-is-done bitcoin transaction promise.

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