Smart move, this will allow them to further hedge the payment processing (liquidating or selling merchant BTC for fiat) side of the business, beyond depending on standard OTC liquidity.
Build up liquidity on both sides of the market, then take their 1% on each side. That's good business.
Recipients need to have a BitPay ID and cryptocurrency wallet in order to receive payment and companies are charged a 1% fee. There are no foreign exchange fees.
BitPay ID? Does that mean recipients need to register at BitPay?
Yep, I remember they introduced it after the FATF published the new travel rule. They began requiring it if you want to send $3K+ or receive $1K+ through Bitpay.
To be fair though, collecting photo ID, taxpayer ID#, etc. is really standard for payroll processing companies. In most countries (certainly the US and similar) it's required for tax reporting and/or withholding. I would be surprised if they didn't require verification.