- Solana Pay is a collaborative creation between Solana Labs, Circle, Citcon, Phantom, FTX, Slope and Checkout.com based on the growing demand and relevance of digital payments.
- The backbone of Solana Pay with: without censorship and without intermediaries.
- Solana Pay allows you to send stablecoins at dollar parity from your wallet directly to the merchant’s account, settling immediately with extremely low costs compared to PayPal.
Payment technology has done nothing but evolve. Between 1800 and 1900 checks were the default and most used form of payment, then it evolved to cards and by 1998 the first online payment processing company called Confinity was founded, later changed to X.com and, in 2001, it again changed its name to PayPal by which we know him to this day.
Just as payment methods have evolved hand in hand with society and its needs, it would be naive to think that the evolution of online payment processors will end with PayPal technology. Is PayPal really the best we can aspire to?
PayPal, yes, was ahead of its time in facilitating instant payments between people using the Internet, but, as everyone knows, cryptocurrencies achieve the same instant payments but with much lower costs and although there is still much to develop, some consider Solana Pay to be the Visa or PayPal of the Web3.
That is why below we will let you know what Solana Pay is and if it really has something special. But, for this, we must first review what Solana is.
What is Solana?
Since the birth of Bitcoin, a large number of cryptocurrencies have been created and some of them have aimed to improve certain aspects of bitcoin and its blockchain..
In general, cryptocurrencies with long-term potential are those that seek to solve a real problem but are also feasible. Consequently, cryptocurrency projects have been created, aimed at, for example, improving efficiency or reducing transaction times.
One of these solutions is Solarium, considered as the rival of Ethereum and, apparently, now aspires to be a rival of Visa and PayPal. This is an open source public blockchain that supports Smart Contracts, Non-Fungible Tokens (NFT) and even Decentralized Applications (dApps).
It was created in 2017 by Anatoly Yakovenko and Raj Gokal. Yakovenko saw that other projects focused on efficiency but neglected time. As you can imagine, for a payment to be instantaneous, time is of the essence.
The Solana founders noted that confirmation time is a factor that nodes must validate when there is no standardized clock because transaction timestamps will vary per block. Thus, In Solana’s blockchain, all nodes run on the same clock, that is, there is a standardized clock and thus a factor that must be validated is eliminated, allowing the network to be accelerated.
As a result, Solana boasts a theoretical throughput of 65,000 transactions per second (TPS) with almost zero fees. The word “theoretical” is important.
Right now, Solana is handling 1,799 TPS, however, this is normal; the network doesn’t have to process 65,000 TPS, it’s just a theoretical limit. For example, Visa processes an average of 1,700 TPSeven though it has a theoretical limit of 30,000 simultaneous transactions.
Another important thing to know is that the network has its native token which is the center of everything called SOL. This implies that said cryptocurrency is used to carry out transactions within the network, as a governance token and as a reward token for validators.
This does not mean that SOL is the only cryptocurrency that is handled on the network. Each dApp created on the Solana blockchain will likely have its own token that needs to be compatible with SOL.
So, in conclusion, given the architecture and technology of Solana, the network can process a large number of transactions per second with low fees and costs, and therefore, they have decided to build Solana Pay.
What is SolanaPay?
Solana Pay is a collaborative creation between Solana Labs, Circle, Citcon, Phantom, FTX, Slope and Checkout.com based on the growing demand and relevance of digital payments.
Solana Pay is a new open source payment protocol. Its objective is to pave the way for digital money to prevail in the future and for it to move through the Internet without censorship and without intermediaries. These last two factors are the backbone of Solana Pay: without censorship and without intermediaries.
Payments without censorship and without intermediaries
Have you ever wondered: How does PayPal work? PayPal fulfills the role of intermediary between the bank and the merchants, and, since it is an intermediary, some benefit must be obtained from the service it provides, therefore, although creating a PayPal account is free, the platform charges fees for certain types of transactions.
In fact, PayPal fees can be as high as 5% of the transaction amount or even higher.
Also, being a company, it really has the power to decide to block a user’s account because of their nationality or activity without much justification.
This makes it no longer sound so bad that without censorship and without intermediaries, right? Solana Pay allows the consumer to send digital dollar currencies, such as USDC, from their wallet directly to the merchant’s account, settling immediately at extremely low costs compared to PayPal.
Being an open protocol, developers are given standardized payment specifications that allow them to develop and customize.
What’s so special about it?
Solana Pay is a solution that seeks to use the Solana blockchain to solve another specific problem: the absence of fast and cheap crypto payments.
In theory, Solana Pay confirms transactions in less than a second and commissions on average they are $0.0005.
How does it work?
To implement Solana Pay it is only necessary to enable a QR code on a merchant’s website or at the point of sale. Such a QR code will allow large and small merchants, e-commerce platforms and others to accept payments and make transactions with ease.
According to Solana’s press release, the step-by-step is as follows:
- The customer scans the merchant’s QR code. The client’s wallet will interpret the QR as a URL requesting a transaction.
- The wallet makes an HTTP request to the merchant’s API.
- The merchant will receive the wallet address in the request and will be able to respond with a custom transaction for the customer.
- The client will be able to see the details of the transaction in his wallet.
- The client approves or rejects the transaction. And, if approved, you will sign with your private key and send the transaction.
Solana Pay offers a new type of relationship between merchants and consumers never seen before, peer to peer.
Merchants will be able to maintain a direct communication channel with their customers. giving merchants the possibility of creating new promotional strategies, such as loyalty programs. In fact, merchants will be able to decide whether to choose to pay transaction fees.
On May 6, 2022, Solana posted on Twitter a demo of how Solana Pay works which can be seen in the following Tweet:
Which cryptocurrency wallets does Solana Pay support?
Currently Solana Pay supports 3 wallets: Phantom, Crypto Please and FTX.
- Phantom: This is an exclusive wallet for the Solana Blockchain. It allows buying and holding tokens as well as exchanging cryptocurrencies.
- FTX: It is a relevant crypto exchange that handles a wide variety of cryptocurrencies, including Solana.
- Crypto Please: It is also a wallet especially focused on the Solana Blockchain and allows you to send cryptocurrencies through Telegram and WhatsApp.
final thoughts
Cryptocurrencies have started a revolution that extends through everything that the world financial system and the banking system implies. Payment processors in particular are becoming more and more relevant and therefore developers and innovations will keep coming.
According to him Press releaseSheraz Shere, director of payments at Solana Labs, believes that Solana Pay is the first step on which the entire ecosystem of can be built and further evolve.
“A revolution in merchant payments is now happening in ways that weren’t possible before, thanks to Solana’s unique speed, scalability, security and cost differentiators.“, said. “We’re enabling money to move the way data moves on the Internet: instantly, peer-to-peer, and at negligible marginal cost“.
However, you should always study the two sides of the same coin. Yes, Solana and Solana Pay have a promising future, but still, they are both at an early stage of development.
In particular, the Solana blockchain continues to work to achieve network security. Consequently, the success of neither solution is guaranteed.
Even so, it is essential to know how payment processors are evolving and how the consumer is increasingly demanding solutions without intermediaries, without censorship and with low costs.
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