Crypto Payment User Experiences KYC Hurdles on Newegg, Sparking Debate on Friction

A recent attempt to pay with cryptocurrency on Newegg.com led to significant user frustration over Know Your Customer (KYC) requirements, drawing attention to ongoing friction points in digital asset transactions. Eddy Lazzarin, a prominent figure from a16z crypto, publicly detailed his experience with BitPay, the payment processor used by Newegg, which mandated account creation and identity verification.

Lazzarin shared his discontent on social media, stating, > "Buying hardware on @Newegg and was excited to pay with crypto. Redirected to @BitPay, then forced to make a Bitpay account, and then asked to upload driver's license. Absolute joke and completely unnecessary." This highlights the unexpected steps encountered during what he anticipated would be a seamless crypto purchase.

BitPay, a long-standing cryptocurrency payment gateway, implements KYC procedures to comply with anti-money laundering (AML) regulations and other financial compliance standards. These measures, while necessary for regulatory adherence, often introduce additional layers of verification that can contrast with the perceived simplicity and decentralization of cryptocurrency transactions.

Lazzarin proposed more streamlined alternatives for crypto payments, suggesting that an "acceptable experience would be to request user send funds to (network, address)." He also envisioned an "ideal experience" through a protocol that allows payment initiation from any user's funds source, filled on the merchant's side. Despite this specific incident, he noted, "I've had great checkout experiences several times this year," indicating that smoother processes are indeed possible.

Newegg has been a pioneer in cryptocurrency adoption, accepting Bitcoin since 2014 and expanding its crypto payment options through BitPay over the years. This incident underscores the broader industry challenge of balancing regulatory demands with user expectations for frictionless digital asset payments. The push for more user-friendly and privacy-preserving payment solutions continues to be a key area of innovation within the crypto ecosystem.