Bitcoin startup Zap is launching a cash back option for users of its Lightning payment app Strike. The feature called “Cashback by Strike” allows users to earn money back on Strike when they make payments via the Lightning Network.
Strike is a platform created by Zap that enables Lightning payments from a user's bank account or a debit card. It is built upon Olympus, a Lightning-enabled fiat on-ramp developed by Zap.
Cashback now gives Strike users between 5% and 15% back every time they make a payment via Lightning through designated merchants. Zap founder Jack Mallers explained in a blog post:
Cashback is about as conceptually simple as it gets. You simply scan, confirm, and earn cash that is instantly available in your Strike account.
For decades, merchants have struggled with high credit card fees and steep barriers to conventional payment processors. According to Mallers, accepting credit card payments in niche sectors such as the Cannabis industry is significantly more expensive than in mainstream industries.
Mallers noted that his family-owned cannabis business was charged around 10% fees for credit card transactions.
“There was nearly $4 trillion spent using credit cards alone in 2018. The average credit card processing fee ranges from about 1.3% to 3.4%, and this doesn’t include the payment processor’s cut. We can safely estimate a lower bound of $52,000,000,000 in credit card processing fees alone paid by merchants (likely closer to $140,800,000,000).”
Eventually, the family business implemented Lightning payments through Strike and BTCPay. This allowed the firm to circumvent double-digit credit card fees. Mallers stated the family business’ adoption of Strike and BTCPay created a “brilliant network effect” in Boulder, Colorado.
“The word was getting spread throughout Boulder, CO that if you download and use this new app to buy cannabis, you get a cash reward! We saw mainstream, non-technical users migrating away from the credit card processing networks and onto the Bitcoin/Lightning Network.”
The low fees and low cost of entry could make Cashback by Strike compelling for both mainstream users and merchants.
Strike recently launched Cashback with a group of four merchants and plans to scale up over the next few weeks.
The application is starting with the Bitcoin-only apparel store BitcoinShirt.co, gift card platform Bitrefill, online shop CryptoCloaks, and Lightning Network-powered video game Lightnite, which will provide between 5% to 15% cash back to Strike users.
The process of Cashback is simple; scan a QR code, confirm your Lightning payment, and earn cash back.