When “Free, Unlimited, Forever” Turns out To Have Limits, After All

By John Stewart

While some startup transaction processors have capitalized lately on the idea of so-called free processing, at least one has now decided to backtrack on that concept. BitPay Inc., an Atlanta-based processor of Bitcoin transactions for merchants, announced Wednesday it is scrapping a plan it introduced only 14 months ago and billed as offering “unlimited” free processing “forever.”

For new merchants, BitPay’s so-called Starter plan is now free for the first 30 transactions per month, or up to $1,000 in daily payments. After that, a 1% fee applies. Larger merchants in the company’s Business plan will now also pay a 1% fee rather than a fixed $300 monthly charge.

In a blog post on BitPay’s site, co-founder and executive chairman Tony Gallippi says the changes are intended to make it less costly for merchants to try out Bitcoin acceptance.

“In the past two years, our fixed pricing model set a relatively high entry-point for businesses experimenting with accepting bitcoin,” Gallippi says in the post. “The new plan will lower the risk of experimenting with bitcoin acceptance for mid-sized businesses, while enabling our team to better focus on Business plan merchants.”

BitPay is also justifying the change by offering product enhancements. Starter plan merchants, for example, will now have access to a transaction dashboard and a simplified refund and invoice-adjustment flow.

The new pricing plan represents a sharp turnaround from the 4-year-old company’s July 2014 announcement, in a post headlined “BitPay’s New Plan: Free, Unlimited, Forever,” that it was scrapping transaction fees. That post, also authored by Gallippi, decried card-based interchange fees as burdensome to merchants and looked forward to a future in which transactions could flow free of charge. “When we started BitPay in 2011, we saw an opportunity to finally give merchants around the world relief from interchange fees,” said the post.

At the time, merchants in the Starter plan were automatically moved to the new free-and-unlimited plan and had refunded to them any fees they paid for the remainder of the current billing cycle. According to the July 2014 post, BitPay’s rationale for the free plan was to reach a goal of 1 million merchants by the end of 2016.

Since then, other startup processors have moved to scrap or reduce transaction fees in a bid to attract interchange-weary merchants. Des Moines, Iowa-based Dwolla Inc., for example, in June announced it was eliminating a 25-cent fee it had charged to receivers of transactions above $10. Unlike BitPay, 7-year-old Dwolla focuses on automated clearing house transactions.