POSaBIT – Safe Point-of-Sale Bitcoin Payment Merchant System?
POSaBIT is a FinTech startup based in Seattle, WA that allows consumers to purchase digital currency with credit or debit card at point-of-sale and use it to make cash-only purchases from tech-savvy merchants. The company raised 1.5 million in funding from angel investors earlier this year.
Marijuana was legalized in Washington back in 2012, but pot shops are usually cash-only. There are a few shops in town that will let you pay with a debit card. Even ones that do use a cash register and charge extortionate fees. But credit cards cannot be used anywhere.
This is because banks and finance companies are nervous about getting in trouble with federal regulators if they finance purchases of a Schedule I prohibited substance, even if that substance has been legalized by state voters.
Seattle pot lawyer, Daniel Short explained, “It’s not that banking is absolutely unavailable. It’s that banks are very risk averse, and larger banks are aware that dealing [with] cannabis brings a host of federal liability. The lack of access to banking is going to create opportunities for entrepreneurs to create workarounds.”
POSaBIT Bitcoin Kiosk Solution
The workaround opportunity was seized upon by POSaBIT. The Square-based startup allows consumers to buy Bitcoin using their credit card and use it to make purchases at pot shops.
“I saw an industry that was in dire need of a credit solution,” says POSaBIT CEO and co-founder Ryan Hamlin, a former Microsoft executive. “I said, ‘Software has got to be able to solve this problem’” by eliminating cash from the transaction. He calls POSaBIT a “bitcoin kiosk solution.”
POSaBIT has since added the ability for consumers to purchase Litecoin and the platform is used by more than 30 stores across Washington, thus far processing upto $5 million in transactions. It is fully compliant with KYC, AML and OFAC, highly secure with advance data encryption with real-time transaction history, robust reporting system, advanced auditing features.
POSaBIT gives consumers easy access to digital currency by allowing them to purchase it during the retail experience. These digital wallets can be used to make purchases on the spot or anywhere that accepts cryptocurrency.
Ban on Bitcoin?
POSaBIT's quest to provide a cashless solution for pot shops wasn't without legislative demur.
A Washington legislator, Ann Rivers, introduced a bill to the state senate earlier in the year in a bid to make Bitcoin illegal for pot transactions, citing the Cole Memorandum as placing the state's system in jeopardy if the virtual currency were not banned due to FinCEN financial transparency requirements.
The bill stated, “A marijuana producer, marijuana processor, or retail outlet must not pay with or accept virtual currency for the purchase or sale of marijuana or any marijuana product.”
The Co-Founders of POSaBIT, Ryan Hamlin and Jon Baugher, testified against the bill, arguing that virtual currencies are more transparent and the platform reduced reliance on cash for the unbanked and therefore eliminating the risk of theft.
“The idea that it is untraceable is simply false. Cash is dangerous. It’s dangerous to hold. It’s dangerous to move.We have more transparency in our system than any cash transaction,” said Hamlin, adding that POSaBit requires driver’s license and credit card information from the people who use its services.