Topic: [ANN] SMS2BTC.CO.UK: Purchase BTC instantly with SMS in the UK (Read 4173 times)

I've done some thinking, and I'm considering discontinuing our service for mobile payments (SMS) for bitcoins.

The incentive for fraud is pretty high with cryptocurrencies, as once bitcoins are paid out, they can't be reversed. If we sold ringtones, if someone got some of these it wouldn't be much of a big deal, since we wouldn't incurr a big monetary loss because of it, but as it is now, when our service is used for money laundering or fraud, the loss will be passed down to us.

Initially, my idea was that selling bitcoins to mobile users would give users the ability to get bitcoins quickly, although a bit expensive for the end user. It was also an idea of mine that there shouldn't be any draconical restrictions on the ability to do these purchases.

However, there's so many ways this can be exploited, ie. hackers hacking into operators websites and misusing customers mobile accounts, handsets that gets stolen and loaded with credit from a stolen credit card.

So there's been several tips as to how to secure the service, both from within our team and from others. The end point is however that if mobile operators are defrauded, the losses will be put on us, and we won't know for sure until 45 days have lapsed.

Zerokwel in this thread suggested that we limit the transactions to one 5GBP pack per 45 days until they have proved trustworthy. Might seem like a good suggestion, but what if a cracker get's access to a lot of phones/phone numbers, then he could buy one pack with each of those. Of course this would limit the number of fraud cases pr. mobile number, but wouldn't necessarily limit the total amount of cases. But we could for instance, have limits as to how many purchases could be done pr. day and lower risks that way.

But I guess many customers would want more than just a 5GBP pack, so perhaps it would be kind of annoying just to be able to purchase that little in a 45 day period. Still after that 45-day period, we would only know that the handset in question did pay for the 5GBP pack, if we set it on no restrictions, we would have no way of knowing it would be topped up with a stolen CC in the future for bitcoin purchases for instance.

So basically we would need to cover for possible fraud in our margin, and for the service to be profitable we would need to have so few fraud cases that the legit purchases covers for them.

I understand most customers are legit, but there need only be a few rotten eggs before we suffer bad monetary losses.

What we might try would be something like limiting each mobile phone to a 5GBP purchase for the first 45 days, untill we se we are paid, still we wouldn't know for sure how much of a percentage was fraudulent purchases before the 45 day period was up.

I was also thinking about the possibility of asking for identification from the users, but this would be a huge hassle if you just really just wanted some quick coins.

Of course, if we had a system where each phone number had to be tied to identification papers, the chance for fraud would probably be a lot lower, however, how many would really give a copy of their ID-papers just to be able to buy a few bitcoins with their mobile phone? So, instead of the convenience and quickness of just getting the bitcoins right away after sending the text, you'd need to register and submit ID-papers. However, then you could later buy bitcoins as a verified customer with SMS. But I assume most of those willing to submit ID papers are a member of an exchange anyway, and it's a far lot cheaper pr. coin to get them at an exchange with a direct bank transfer, although a lot slower (usually).

So I'm not sure if I can see any solution at the moment where the service could still be of ease of use and highly available to the end customer, while still working good to prevent fraud. Also it seems like we need to have a steep margin to cover potentially fraud cases.

Perhaps bitcoins is not ready for the mobile payment market yet ?

If anyone has more experience with this kind of service, and knows more about the risks involved, then I might as well consider selling all the tld's I've aquired for this service, + the source code. I could even help setting up the service for anyone interested, but I wouldn't be interested in taking the monetary risk.

So, unless there's any good suggestions, I'm very strongly considering shutting down the service for good at this point. It would be great to have a variety of different ways for end users to aquire bitcoins, but mobile payments seems to be a very difficult thing to do in regards to bitcoin.

zerokwel, thanks for the interesting input. I will consider your suggestions. We're considering several alternatives as how to restrict fraud,
and we might have to do some recoding of the service to impose such restrictions. We do hope we can continue to offer this service.

That's a shame... Its always the few that spoil it for the many. And as I say the more ways for to do bitcoin transactions the better.

Limit the transactions to 1 £5 pack per person per 45 days until they have proved trustworthy.

Hopefully at the end of the 45 days you get paid for 100% of all the sales

Ok, here's some really bad news. I'd like to have the input from the community on this.

I'm not the most active on this forum, but I've been a user here since early 2011, and I do believe in bitcoin.
At the same time we also want to make business, meaning we want a profit from our services. Unfortunately,
as we've registered the domain names, done the development and testing, we're still in the red. This was to
be expected however, as it always takes quite some time to build any substantial volume in sales for any
service.

There's been complaints in this thread that the markup is too high for our service. Most fees are extracted
from the fees charged by mobile operators and payment processors. Lately another issue has come to our
attention that might explain the high fees of other similar services, like dialcoin.

When first starting to make the mobile payment feature, we noticed this on Impulsepay.co.uk's website:


So we were under the impression that we would not have any liability. This was wrong. In retrospect, we should've checked this more closely earlier on. Anyway, we
just learned today that payments are not processed from the mobile companies to our payment processor until 45 days after the purchase was done. So basically,
from the time of sale, until we actually receive the funds from the purchase, 45 days goes by. Since our cut of the fees are not very high, we would have to have a
lot of legit sales just to cover a single fraudulent purchase.

At the moment we're sitting with a too big liability as we have no idea whether sales done so far will actually be paid or not. Esp. if numerous sales are done to a single
handset, we have no way of knowing whether we will receive money from these sales until 45 days have gone by.

There's two vectors for fraud as I understand it.

1. Someone fills up credit on a handset with a stolen credit card.
2. Someone steals a handset outright and uses it to buy bitcoins.

In both cases, the bitcoins the fraudster gets is non-reversible unless he willingly pays them back.

So I've temporarily suspended our Mobile Payment solution. I don't really know if we can continue it at this point. Impulsepay suggested limiting monthly sales for each phone,
but as you see, when we need several sales to cover a single fraud, this is not a business model that will work.

In an ideal world, there would be very low fees from the mobile providers and payment processors, and the legal owner of every handset would be liable for all expenses initiated
from that handset, stolen or not.

The situation is that the liability is with us. I've received some tips that we should increase the commission, thus needing to have fewer legit sales to cover a fraudulent one, and/or
starting to require identification papers from users. However, identification papers could also possibly be stolen or faked (although it would lower the amount of fraud). And I certainly
don't think any user would be interested in waiting 45 days for getting their bitcoins. It was also suggested to me that we hold onto the BTC until we're sure that payment has been
received.

Another solution would be to only permit users that we somehow validate to be legit users, but this is also hard to do properly. At the moment it looks like that anyone could just
steal a mobile phone, then go to our site and buy 'free bitcoins'. That's why we've shut down the service at the moment.

We'd basically want to offer to purchase bitcoins with mobile payment (SMS), but it seems like this is very difficult to do as there's so many hurdles. Textcoin.co.uk also take a
very high premium at the moment, and I'm starting to understand why this is necessary.

If there's anyone of you that think this service is worth operating, and have any ideas as to how we could do it to remove or reduce our possible liability, I would be very interested
in hearing about your opinions.

It would be a shame to shut down the service, as there's a decent amount of resources used for developing the service, and it's not the intention of ours to flee the users, and our
cut of the pie have been pretty low for the time we've been operating.

Thanks in advance for everyone that chimes in.

I like this service

Service is now working 100%.

http:/sms2btc.co.uk/

I wouldn't be surprised if you're absolutely right.  Still makes the 100% markup seem a little steep.  Maybe it's a question of volume for them.  Anyway, their pricing is none of my business; but I do wonder how many people are going to be put off by it.

Aye I had to add the extra PAYNOW-CODE for it to work.

There isn't much info and I don't know for sure but I'd guess that they are charging £20/month *AND* a 40-50% per transaction fee.

Hi zerokwel, I guess I should've checked here before I sent you a pm. However, I was wondering whether you used the prefix 'PAYNOW-' or not ? Ideally we want the service to work without that prefix, as it's not shown on the payment information screen. We're talking with the payment provider to have this fixed, however it would be nice if you could shed some light as to whether you used the prefix or not for your purchase.

Thanks.

Thanks for that. Did not expect anything and tbh thought the error was at my side.

Just tested with the above info and its working 100%. coins got paid instant

First off, I will just say thank you to Zerkowel for bringing this problem to our attention. I sent him 1 BTC as a thank you (TxID: ca3d7535cb9c34293bbfd596dcfda67b5749338d71e74b2c9ad67a0b44438a3d).

Lately we've had lot's of orders stuck at 'pending' so I asked for it to be tested, and the test showed that the problem is that the text that's supposed to be sent to the payment provider
has changed. It used to be Text PAYNOW-XXXX to NNNNNNNNNNN but it was changed to Text XXXX to NNNNNNNNNNN. Since we receive this data from a payment processor,
we didn't spot this error until zerokwel made us aware of it.

Immediately upon learning about the issue, I asked for a test to be issued on our side, and the test was, just as Zerkowel experienced, unsuccessful, however by adding the prefix 'PAYNOW-'
it worked again. Since it's a requirement from the Payment Processor that we use the data provided from them for the PayforIT-form, we've contacted them, and they usually respond promptly, so the issue will most likely be fixed very soon.

In the meantime, just add the prefix 'PAYNOW-' in front of the 4 char alphanumeric code to make a successful purchase.

Since most customers probably have been charged the price for a standard rate SMS (usually less than 20 pence) with their unsuccessful purchase attempt, we're willing to pay back their expenses in that regard. Please note that the standard rate SMS used to send the initial payment message is charged solely by your phone company.

We apologize sincerely for this problem, and will take proper actions to reduce the likelihood of similar problems in the future.

Hi Zerokwel,

thanks for your feedback. The service have been tested not long ago, and everything worked fine then. To find out what
happened in your particular case, I'd need to talk with you. I've send you a pm, so I hope we can get to the bottom of this.

Thanks for notifying us.

If there's anything wrong with the service, I will get back to it in this thread, so everyone can see that we're working to
fix the issue.

something broke ?. Thought I would give it a go (dont pay my mobile bill anyway).

entered text the code to the number but will not let you click continue. also never got any reply texts to say I was charged.

We have with immediate effect lowered our prices for SMS purchases with ~6%.

I'm afraid that buying bitcoins with SMS can't be done with no fees or very low fees for a long time to come. In most countries the telephone companies charge high fees for delivering this service. So if any company wanted to deliver a SMS 2 BTC service that had no overhead, they'd need to subsidize the sales.

As for VAT, when a purchase is done, a receipt is available with all details, just select 'Show my receipt' from the page that loads after payment has been done. Our service follows standard rules in regards to VAT.

So basically, SMS purchase of bitcoin would be ideal in the event you would need a smaller amount of coins very quickly. The delivery is immediate upon receiving the payment.

In the event anyone finds a cheaper service for buying bitcoins over SMS in the UK, let me know, as I'm not aware of any lower priced services at the moment.

http://sms2btc.co.uk/

If you say so; I don't know anything about the business. (but http://www.textvertising.co.uk/sms-services/sms-competitions/text-raffles.htm is interesting: £20 a month)

It seems odd though; as what you say would suggest that every premium text service should cost more than £3.00.  From memory, I've never seen one that cost more than £1 per text.  I would therefore have reasoned that your service should be "price of bitcoins + £1 + VAT" (I'm almost certain you'd have to sell the coins with VAT).  It also seems odd that the markup is in bitcoins, not in pounds.  If the phone company is charging you X for the £5 pack; why is it charging you 2X for the £10 pack?

However, if that is the case, can I suggest you state that the high fees are the phone companies fault.  People will be a lot more forgiving of your high prices if they see that you are being shafted by the phone company as much as they are.

Yes, unfortunately the phone companies charge high fees. Let's hope these fees decrease in the future, making mobile payments not only a quick and easy solution, but also a cheaper solution.

The phone companies charge very high transaction fees for SMS payments.. usually 40% to 50%.. there's no way to make it cheaper using this technology - unless the telcos slash their prices.

Amazing.  In all that time you couldn't have implemented PRICE divided by COINS display?

And still it's cheaper to buy two £5.00 packs than one £10 pack.

Here; I'll help your programmer...

0.79 BTC for £5.00 = £6.32911 per coin  (you see, I divided the price, £5 by the number of coins, 0.79)

1.57 BTC for £10.00 = £6.36942 per coin (that's 10 divided by 1.57)

Note that £6.36 is bigger than £6.32.  That means the price per coin is higher when you buy more of them.  I wonder, given that fact, how many £10 pack sales you're getting.



Actually, I doubt you're getting many sales at all; current Intersango price is 3.32 per coin.  Your markup is therefore £3 per coin.  I'm sure some people would be willing to pay a certain premium for the convenience of an SMS service, but a near 100% markup is excessive I think.

My suggestions then (not that I've got any say in anything you do):

• Lower your markup from 100%
• Show the price per coin, rather than the price per pack so the customer knows what they are buying
• Get the bulk discount the right way around... the price per coin should be lower for someone buying £10 worth instead of £5 worth

This is meant in the spirit of helpfulness.  I would like to see bitcoin businesses succeed.

A bit late update here, just wanted to let you know that the promotion period is now over.

We think we're still offering the best prices for SMS 2 BTC, so check us out here:

http://sms2btc.co.uk

Thanks for the interest in our service realnowhereman. Your feedback is duly noted.

This is an excellent idea for a service, but I think you should calculate the deal price for the customer so they know what premium they are paying for using mobile.

For example at time of writing


It would be nicer for the user if they could see the comparison numbers (Pack01, £6.41 per BTC; Pack02: £6.45 per BTC; Intersango.ASK = 3.28 per BTC).

Incidentally: it's a bit weird that it's cheaper to buy two £5 packs than one £10 pack, is that right?

-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA1

I'd just like to say thank you to the customers that already made purchases from us with the mobile payment feature.

For a limited offering, the following campaign will be run:

If you purchase one of our coinpacks within the next 7 days (until March 6th), you will receive a manual payout matching your purchase, so with the current prices of 5GBP for 0.78 BTC and 10GBP for 1.55 BTC (prices changes dynamically depending on market conditions), if you order say 1.55BTC for 10GBP, you will get an additional 1.55BTC paid to the same address that came with your order.

This campaign is limited to the first 5 customers.

Rules are:

1. Go to http://sms2btc.co.uk
2. Purchase one of the coinpacks (5GBP or 10GBP pack)
3. Make proof of the purchase, either through a PM to me, or as a post in this thread. Sufficient as a proof would be any information connected to your purchase, like the Order ID for the purchase,the BTC address for the payout or any other snippet of information that could uniquely identify your purchase. If I would need any additional information, I will ask about it.
4. Claim the bonus in this thread.
5. This is an introductory campaign, and it's limited to one bonus payout pr. customer.
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Dear community,

we're pleased to announce the availability of a mobile payment option at bitcoinmarket24.com.
We offer up to 55% cheaper prices than our competitors. The mobile payment feature works
with O2, Orange, Three, T-Mobile, Virgin and Vodafone for the UK market.

Currently we are offering two different Coin Packs, the 5GBP Pack and the 10GBP Pack.

As a precaution, five purchase slots will be available pr. hour for the starting phase of this service.

Once payment is done with your cell phone by sending an SMS as described on the payment page,
delivery is instant to your bitcoin address.


To check out our new payment feature, please visit

https://bitcoinmarket24.com/BuyBitcoinsForSMS/

Sincerely,
The Bitcoinmarket24.com crew