Bachelor's Thesis Haokun Zheng

Existing payment solutions for in-person cryptocurrency transactions remain very sparsely developed and continue to have a poorer user experience than their fiat payment counterparts. Even on the most popular and largest cryptocurrencies by market cap, payments are still in essence just realized by generating an URI-encoding of the payee information and then sending that to the paying party for transaction processing – often realized through a simple QR code. The Bitcoin network for example uses a standardized URI-encoding scheme [2] which is then implemented by wallets and used by payment processers such as OpenNode [3] or BitPay [4] to build basic checkout solutions. The Ethereum ecosystem also has an equivalent URL-schemes to encode such transaction requests [5]. One of the more advanced payment frameworks is Solana Pay [1] on the Solana Network. Beyond a simple URL-encoding specification, it offers support for payment references and API-based interactive transaction requests with partially signed transactions and pre-determined gas fee payors. Yet after all, even the most sophisticated payment protocols and commercially available solutions still work on the principle of transferring formatted transaction information to the payor and requiring them to process and complete the transaction. This distribution of roles makes use of the historically given processing functionality of user wallets, however, comes with many drawbacks regarding its user experience. While typical fiat in-person payments (e.g. Visa/Mastercard) are processed on the merchant’s side and need only an offline and passive input from the customer which can be quickly done through a tap of a card or smartphone, current crypto payment implementations require a more time-intensive QR-code scan interaction flow (unlocking phone, opening/unlocking wallet app, selecting QR scanner, aligning phone camera with QR code etc.) in a fully setup wallet app on a mobile phone with sufficient battery charge and internet connection. Furthermore, having a transaction be processed and sent off on the customer’s side forces the merchant to repeatedly check for incoming funds once payment information is shared and inhibits the implementation of more user-friendly payment methods such as tap to pay payments. Therefore, a tap to pay system for cryptocurrency transactions similar to the fiat counterpart in which the merchant is processing transactions and the customer only required to carry a passive and offline authentication medium (e.g. smart card or mobile phone) is strongly desired.

Due to the relative novelty and simultaneous fast developments in the crypto payments industry, limited amounts of academic papers have been published analyzing cryptocurrency payment methods directly and most contributions stem from non-academic publications. Many previous works however demonstrate and validate the need for further research in this area. After development and evaluation of a Point-of-Sale payment system for Bitcoin Lightning payments, Michael Fröhlich et al. [6] established the too lengthy interaction flow required by current QR- code-based wallet payments as one of the core user experience issues. This finding is further validated and identified as general chain-agnostic issue in a large user experience study with mobile crypto wallets by Artemij Voskobojnikov et al. [7]. Dongcheng Li et al. [8] analyzed recent developments in NFC payment technologies in the context of potential crypto payment implementations and identified various strong benefits and a strong need for NFC-based cryptocurrency payment solutions. Last, Abdul Ghaffar Khan et al. [9] also demonstrated the user experience and security downsides of a payor-side (and therefore hot-wallet based) transaction processing and proposed a multi-layer QR-code based cold-wallet payment solution with a process flow that corresponds to that of a modern tap to pay system.