Payment system with blockchain integration

Abstract

Electronic payment system, comprising at least one user device with an application for payment initiation, a backend system connected to the Internet and a blockchain infrastructure with at least one smart contract, characterized in that the backend system is configured to accept deposits and withdrawals in government currency (fiat) from users, to automatically deposit deposited amounts in the form of a stable cryptocurrency token (stablecoin) on the blockchain, and to correspondingly provide withdrawals of stablecoin amounts back in fiat currency, and in that the payment system provides the user via the application with a user-friendly interface that enables transactions without the user having to maintain their own crypto wallet or have cryptographic knowledge.

Description

Technical description:

[0001] The present invention was developed within the CashXChain project and relates to a system for the automated and user-friendly execution of blockchain-based payments with smart contract logic, QR or NFC triggering, stablecoin conversion, and fiat on / off-ramp integration with an abstracted frontend.

[0002] State of the art and problem: Conventional digital payment systems (e.g., bank transfers or online services like PayPal) are reaching their limits, especially when it comes to cross-border payments. International transfers are often very slow (taking days), expensive (high fees, poor exchange rates), and complex to process. Even in local commerce, costs for expensive card terminals or intermediaries are often incurred. Online payments can also entail uncertainties (e.g., chargeback risks, risk of fraud) and also incur fees. On the other hand, cryptocurrency systems generally offer the possibility of transferring value worldwide in near real time and with low fees. However, crypto payments are too complicated for many users – they generally require technical understanding, dedicated wallets for managing private keys, and trust in volatile cryptocurrencies.Many people are therefore hesitant to use cryptocurrencies in everyday life, even if they would make payments faster and cheaper. There is therefore a need for a payment system that leverages the advantages of blockchain technology (speed, cost-effectiveness, global availability) without the aforementioned disadvantages (complexity, volatility, lack of trust).

[0003] Approach of the invention: The present invention creates a hybrid payment system that seamlessly connects fiat currencies (government currencies such as the euro or US dollar) with a blockchain. This enables payments without borders, while simultaneously offering user-friendly operation similar to established online payment services. At its core, the system consists of the following components: a user device with an app or web interface, a central backend server, and a blockchain infrastructure with smart contracts and stablecoins. Via special interfaces to financial services (so-called on / off ramps), the system is also connected to the traditional banking system and crypto exchanges to automatically process the exchange between fiat and crypto.The technical solution specifically includes: (a) accepting deposits in fiat currency and automatically converting them into an equivalent amount of stablecoin on the blockchain, (b) a simple user interface for initiating payments without requiring users to manage crypto wallets or blockchain addresses, and (c) executing transactions on the blockchain—controlled by smart contracts if necessary—to ensure speed, cost advantages, and security. In this way, the system acts as a bridge between the familiar fiat world and the blockchain world, so users neither experience the technical hurdles of cryptocurrency technology nor forgo the benefits of fast, low-cost transfers.

[0004] System structure and components: As in Fig.As shown in Figure 1, the system comprises a user with an app / web interface, a central backend, one or more smart contracts on a blockchain, and an on / off-ramp component for connecting fiat currencies. The user device (a smartphone with an installed app or a computer with a web browser) offers a clear, familiar interface through which payments can be made, similar to a traditional online banking or PayPal-like service. The user logs into the app / web interface, sees their balance in fiat currency units, and can initiate transactions without having to worry about cryptographic keys or blockchain addresses. In the background, the backend system manages one or more secure crypto wallets or blockchain addresses for each user.The backend accepts fiat deposits – for example, via bank transfer, credit card, or other payment providers – and automatically converts the amount into a corresponding stablecoin. A stablecoin is a cryptographic token on the blockchain that is pegged 1:1 to the value of a fiat currency (e.g., 1 token = €1). This step guarantees that the value transferred to the blockchain remains stable and is not subject to the price fluctuations of traditional cryptocurrencies (such as Bitcoin). The backend can use different stablecoins for different currencies (e.g., EUR tokens, USD tokens), depending on the deposit currency, and manages liquidity reserves to immediately offset any minor fluctuations in value. This ensures that users always see the deposited value represented and are not exposed to currency risk.

[0005] The blockchain part of the system handles the actual transaction processing. For this purpose, the system uses proven, high-performance blockchain networks that enable very fast transaction confirmations (within seconds or a few minutes) and low fees. Transfers between participants are carried out on the blockchain, either directly as token transfers or controlled by smart contracts. A smart contract is self-executing program code on the blockchain that enforces certain conditions and rules. In the context of this payment system, smart contracts are used to process transactions more securely and automatically. For example, a smart contract can function as a digital escrow account: In an online purchase transaction, the buyer deposits the payment amount into the smart contract.The smart contract only releases the amount to the seller when predefined conditions are met—for example, when delivery of goods is confirmed or a certain deadline has passed. This eliminates the risk that the seller will not receive the money or the buyer will not receive the goods; fulfillment of the conditions is automatically monitored by the program code. Even for local payments in stores—if necessary—a smart contract can take over the function of making a payment irrevocable and verifiable. However, local point-of-sale transactions are usually instant and trust-based (since the customer and merchant are physically present), so a simple token transfer on the blockchain initiated by the system is often sufficient.

[0006] Functional processes (examples): Once a user has created an account in the system, they can deposit funds. For example, they transfer €100 from their bank account to the company behind the payment system. The backend receives these €100 and automatically converts them into 100 EUR tokens (stablecoins) on the blockchain, which the user now holds as digital funds. If the user wants to use them to pay in a local store, the process is as follows: The merchant presents a QR code (or alternatively an NFC tag) at the checkout, which contains the merchant's receiving address or a recipient ID. The user scans this QR code with the CashXChain app on their smartphone. The app now shows the recipient (merchant name) and allows them to enter the desired amount (e.g., €9.50 for a purchase). Upon confirmation of the payment in the app, the corresponding stablecoins are immediately transferred to the merchant via the blockchain in the background.The merchant receives confirmation of payment receipt within seconds. This process does not require expensive payment terminals – a simple printed QR code or the merchant's smartphone / tablet is sufficient to accept payments. The blockchain transaction runs in the background and is not noticeably complicated for the user: they simply see that they have paid €9.50 and that the merchant has received the amount. If desired, the merchant can withdraw their accumulated balance in the app as fiat money; the backend would then automatically convert the received stablecoins back into euros and pay them out to the merchant, for example, via bank transfer (off-ramp). All these conversions and transfers are handled automatically by the platform, without the user or merchant having to manually execute crypto transactions.

[0007] The system is similarly simple for online payments. For example, a web shop can offer the CashXChain system as a payment option (similar to "Pay with PayPal"). If a customer selects this option, they are redirected to the CashXChain app's confirmation page or use the app directly to authorize the payment. A smart contract escrow, as mentioned above, can be used in the background to secure the transaction. The customer sends the amount via the system; the amount is held in the smart contract until the conditions (e.g., successful delivery or expiration of a return period) are met. Only then is the payment finally forwarded to the merchant. For both the customer and the merchant, the process is as straightforward as with well-known online payment services, with the difference that intermediaries such as banks or credit card networks are bypassed.The blockchain takes over the transfer function and trust relationship, drastically reducing fees and shortening transaction times. International online payments (e.g., for freelancers or service providers abroad) can also be processed efficiently, without the usual costs and waiting times.

[0008] Special features and advantages: The combination of components described above results in several technical advantages over the state of the art: • Ease of use: Users don't need any prior crypto knowledge and don't need to manage their own wallet. The application presents itself like a regular banking or payment app, while complex blockchain transactions are handled automatically in the background. This significantly lowers the barrier to adoption for blockchain technology. • Speed: Transactions are executed in real time or within minutes, rather than days like bank transfers. This applies to both international transfers (e.g., foreign remittances or remittances from migrants) and local payments. The use of fast blockchain networks enables near-instant payment confirmation. • Cost efficiency: Fees per transaction are significantly lower than with traditional payment service providers or credit card systems. By eliminating intermediaries and enabling direct peer-to-peer transfers, blockchain minimizes transaction costs. Merchants benefit from lower costs per payment, and international transfers also incur only a fraction of traditional fees (no high bank commissions or exchange rate markups). • Security and trust: Smart contracts ensure automated and transparent processes. Agreed transaction terms are technically enforced, reducing fraud or payment uncertainty. For example, a smart contract ensures that funds are only released once predefined conditions are met – comparable to a notary public escrow, but without a human intermediary. Furthermore, the system can be operated by a regulated provider that uses the blockchain in the background, without the end user being directly exposed to it. This increases trust among users who are otherwise skeptical of crypto services, as they have a known legal contact. • Easy integration into retail: Local retailers eliminate the cost of purchasing expensive card terminals. A QR code or any smartphone / tablet is sufficient to accept payments. This promotes adoption among small businesses and the mobility of points of sale (e.g., market stalls, delivery services), as no stationary hardware is required. • Anonymity option: The system can be designed to enable anonymous payments upon request. By using privacy-oriented cryptocurrencies (privacy coins) or unverified wallet addresses, a user could pay as anonymously as with cash – within the framework of legal requirements. This would be a unique selling point compared to common digital payment systems, which usually require full identification. This way, the privacy of those involved can be preserved, for example, for small amounts or certain transactions. • Automated exchange rate calculation: Thanks to integration with financial platforms and potentially AI-powered algorithms in the backend, exchange rates and transaction routes can be optimized. For example, the system can calculate in real time which stablecoin or blockchain network offers the lowest costs and best exchange rates for a specific transfer. This ensures optimal transaction paths are always selected (e.g., using different blockchain protocols or liquidity pools), ensuring the user receives the best possible value for their money.

[0009] In summary, the invention offers a technically innovative payment system that combines the speed and efficiency of modern blockchain transactions with the familiarity and simplicity of traditional payment systems. The clever integration of stablecoins, smart contracts, and a user-centric architecture enables borderless payments without requiring users to bear the usual disadvantages of crypto technology. This system can serve as a basis for making cashless payments in everyday life safer, faster, and cheaper, making the bridge between fiat and crypto accessible to everyone.

Claims

[1] Electronic payment system comprising at least one user device with an application for payment initiation, a backend system connected to the Internet and a blockchain infrastructure with at least one smart contract, characterized by that the backend system is set up to accept deposits and withdrawals in government currency (fiat) from users, to automatically deposit deposited amounts on the blockchain in the form of a stable cryptocurrency token (stablecoin), and to provide corresponding withdrawals of stablecoin amounts back in fiat currency, and that the payment system provides the user with a user-friendly interface via the application that enables transactions without the user having to maintain their own crypto wallet or have any cryptographic knowledge. [2] Payment system according to claim 1, characterized bythat the user device comprises a smartphone with a mobile application or a computer with a web browser, whereby the application enables the user to initiate and confirm payments analogous to a conventional online payment system, without having to provide blockchain-specific details. [3] Payment system according to claim 1, characterized by For local payments at points of sale, a QR code or NFC transponder provided by the merchant is scanned or read with the user device, whereby the recipient data is automatically transmitted to the system and the corresponding transaction is initiated on the blockchain. [4] Payment system according to claim 1, characterized bythat for online payments, a smart contract implemented on the blockchain serves as a digital escrow system, which holds received amounts until predefined conditions are met and then automatically releases them to the recipient in order to ensure secure transactions (e.g. in online trading). [5] Payment system according to claim 1, characterized by that a cryptocurrency token (stablecoin) linked to a fiat currency is used to transfer value on the blockchain, which represents a stable unit of value so that transferred amounts are not subject to significant price fluctuations. [6] Payment system according to claim 5, characterized by that the backend system compensates for any value differences of the stablecoin compared to the referenced fiat currency through deposited liquidity reserves or automatic exchange rate adjustments in order to ensure the nominal fiat value of the digital assets at all times. [7] Payment system according to claim 1, characterized by that the backend system has interfaces with external financial service providers to accept and pay out users' fiat payments, as well as being connected to crypto exchanges or on / off-ramp services to perform automatic exchange between fiat currency and stablecoins in real time. [8] Payment system according to claim 1, characterized by that the backend system includes a module for dynamic fee and exchange rate calculation, which uses algorithms or artificial intelligence (AI) to determine the optimal exchange rates and transaction methods in real time, so that each transfer is carried out with minimal costs and high efficiency. [9] Payment system according to claim 1, characterized bythat the system optionally supports anonymous transactions by allowing the use of privacy-oriented cryptocurrencies or untraceable wallet addresses, so that the identity of the parties involved remains confidential, similar to a cash payment.

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