An introduction

Together with our rebranding to Pagi and the launch of a new website, we have many more exciting news that we are eager to share. In the last year our project has grown from a rough idea to a fully-fledged product with a huge vision. We made immense progress both in terms of software development as well as in connecting with important business partners. We abandoned the cost and time intense plan of developing custom hardware and switched to utilizing a variety of existing hardware applicable for much more versatile use cases that meet real existing demand. And last but not least we faced a steep learning curve helping us to grow as a team while professionalizing our understanding of the IoT and payment industry.

What Pagi is about

With Pagi we build an ecosystem that enables any device to receive payments, to negotiate prices, to issue refunds and to act as a mature economic operator. Our first product is a firmware running on a variety of IoT devices like switches, sockets, plugs, relay boards and valves to enable usage based payment schemes for electrical devices or resources like electricity, water and gas. Installation and configuration is straightforward and can be executed with little technological knowledge. Once installed Pagi controls the connected device or resource with a single output signal. A simple socket: let electricity flow or not. A barrier on a parking ground: up and down. An air condition: on and off. Or even a coffee machine: dispense coffee or not. Almost any electrical device can be monetized by connecting a Pagi device.

Most people immediately feel there are lots of useful applications for Pagi. But let’s have a deeper look. If you think about how we monetize machines today, you realize that in most cases we literally feed them with coins. Some machines can be paid by card or app, but the smaller the machine is and the less revenue it produces, the more likely it is running on coins or can’t be paid at all, because putting a coin slot on a socket is super inefficient. Coin payments require high maintenance, they are prone to errors, to manipulation and they take a lot of space.

We implemented the IOTA protocol to receive payments, because it provides ideal properties for microtransactions and IoT devices due to its feeless and permissionless nature. We are also experimenting with other protocols though and plan to add additional currencies in the future.

But why do we consider distributed ledger technologies superior over traditional payment providers like PayPal? Because first of all their APIs are not designed to deal with small resource-limited IoT devices. Additionally fees and commissions render them useless for many applications. And not to forget, using them requires a bank account. While this might not be an issue for most people in the western world, it actually is an insurmountable hurdle for billions of people. And even with a bank account utilizing these providers bears the danger of accounts being locked for flimsy reasons. To solve this issue we need a permissionless, distributed ledger where users don’t depend on middlemen.

Nevertheless, to a certain extent adoption and regulation of cryptocurrencies is a chicken and egg problem. Therefore, we are also working on a fiat-to-crypto onramp as well as a crypto-to-fiat offramp to onboard businesses and customers from outside the DLT space while showcasing the advantages of a distributed ledger. Due to limited resources available on our IoT devices, this will require an additional instance. We explored several possibilities and are currently working on a prototype. Adding this instance will of course be optional. All Pagi devices still work without talking to any external server except for a freely selectable IOTA node.

Applications

Sell resources

Pagi enables to cost- and time-efficiently resell even small amounts of electricity, water or gas by providing the ability for sockets or valves to receive feeless micropayments.

A prime example is the e-mobility sector which is growing rapidly for many years now. E-bikes, electric scooters and other micromobility vehicles have become a common sight in cities all over the world. Further strong growth leading to a significant change in urban mobility is expected. But all these vehicles share one problem: they need electricity. While a well-functioning network of charging stations for electric cars has been built during the last decade, these stations do not comply with the requirements of micromobility vehicles that need way less electricity but instead a very high distribution density. What if we could grow such a network organically? Imagine a restaurant, a hotel or a private household reselling electricity to people who need it. By installing Pagi anyone can profit from installing sockets with very little technical and financial effort.

Monetize devices

With Pagi it becomes easy to monetize almost any electrical device. An obvious use case is replacing coin boxes in kiddie rides, claw cranes, washing machines and so forth. The list could be endless. This comes with a lot of advantages: the money stored cannot be stolen, the slot cannot clog up and the device needs way less space while installation and maintenance requires less effort.

But replacing coin boxes is just the beginning. Pagi enables monetization of devices that have been hard to monetize before. Let’s take a look at the hospitality industry. Hotels, hostels, appartments, camping sites and basically any provider offering hospitality services can benefit from Pagi by integrating usage based payment schemes into their devices. Energy consumption is responsible for 3% to 6% of hotel operating costs, for 60% of its CO₂ emissions and has increased dramatically during the last decade due to more demanding standards and the development of electronic equipment. Energy in hotels is mainly consumed by temperature regulation with 63% for heating and hot water and 6% for air conditioning¹. In areas with extreme climate conditions, these numbers can be much higher. It is a common issue that guests keep the air condition or the heating running 24/7, even after leaving the appartment. Especially for small providers this behavior poses a high financial risk. The number of appartment owners manually reading the electricity meter during check-in and check-out is rising. Applying usage based payment schemes mitigates financial risk related to the use of electricity, water or gas. Gaining control over costs allows to reduce prices while helping the environment by reducing CO₂ emissions and consumption of resources.

More applications

To grant and monetize access to things and places is another obvious applicaton for Pagi devices. While installation in lockers or barriers to access coworking spaces, toilets or theme parks is quite straightforward to realize, we are also working on more complex usecases like repeated access to accomodation.

Pagi also enables donation of electricity, water or gas to people or institutions in need like schools, hospitals, refugee camps or individuals. This way donations can reach the recipient directly while also being tied to a specific purpose.

Functionality

The main purpose of Pagi devices is to switch connected devices or resources depending on received payments in combination with configured prices. Pagi will support multiple payment models:

  1. Time based payments: Pay for the time of device or resource usage in seconds, minutes, hours, days or weeks.
  2. Consumption based payments: Usage is charged by consumption in units like kilowatthours or liters.
  3. Action based payments: Pay for single actions like opening a barrier or dispensing coffee.

Apart from that Pagi devices can be configured to provide customers with a flatrate or a fixed amount of usage included. This enables providers to meet the desires of different client types while keeping control over costs and offering flexibility at the same time.

Furthermore, the Pagi firmware provides a password protected web interface both for administrators and customers. Administrators can configure credentials, payment addresses and nodes, prices and modes as well as manually increase time/power balances and much more. Customers can use the interface to pause/resume the device and to view payment addresses and time/power balances.

With the implementation of MQTT Pagi devices allow integration into common home automation software like IOBroker oder Home Assistant. Additionally it enables developers to integrate Pagi into their own software. Pagi supports OTA firmware updates that can be triggered through the web interface. It is also possible to configure Pagi as a regular smart switch by using the web interface to disable payment functionality.

Configuration

After powering a Pagi device for the first time, it creates an access point. By connecting to it, the administrator can configure WIFI credentials and payment details through a web interface. After restarting Pagi it will connect to the specified WIFI network and listen for payments.

If Pagi has successfully connected to a WiFi network the web interface can be accessed through the assigned IP address. The interface provides functionality to configure all relevant properties, control the relay state, manage availabe credit, view system information, update the firmware and to reset or restart the device.

Usage

To activate a Pagi powered device or resource, a customer just needs to send a payment to the configured IOTA address. We expect addresses to be placed as a QR code close to the connected device. Codes can either be printed or shown in a display together with the price. Using a display enables address updates without having to print new QR codes. Of course customers can also view payment details on the web interface provided by the Pagi device itself or on whichever solution the device owner chooses.

Whenever Pagi receives a payment, it increases the available time/consumption balance depending on the configured prices. If the administrator configured Pagi to activate the connected device/resource automatically, it will be switched on as soons as a payment is received. Otherwise the customer needs to activate it himself by pressing a physical button or using the web interface. Pagi can be paused the same way. If this happens, any connected device or resource will be switched off and the balance will not decrease until Pagi is resumed.

Security

All communication of Pagi devices is TLS secured and the web interface is password protected. No seed or private key is needed to operate Pagi devices. Only public addresses are stored on the device.

When it comes to manipulation of devices to gain free access to resources or devices, there are a couple of things to bear in mind. Someone with physical access could theoretically remove control mechanisms like Pagi to connect devices directly. Sufficient knowledge and criminal energy provided, any electrical device can be shorted to bypass control mechanisms. This is not an issue if you’re a coffee shop owner having sockets installed in a busy area of your shop. Breaking the enclosure in front of other guests, cutting high voltage wires and splicing the ends without someone noticing is highly unlikely. But imagine an unobserved outdoor vending machine in a public space. Someone could easily come at night, remove Pagi and short the machine to empty it. In this case the Pagi device to power the socket should be installed inside the machine itself. Or think about a public outdoor socket where the Pagi device should probably not be installed inside the socket itself but in an inaccessible part of the power supply. Pagi will provide various different devices offering a suitable solution for all these use cases.

Future developments

Pagi Pro

We are working on a software to bundle administration of Pagi devices in one place and to provide additional functionality that will be needed especially if you scale the number of Pagi devices. Apart from that it will provide a wallet, invoicing, accounting, fiat on- and off-ramps and much more. Pagi Pro will probably come with a freemium model that allows to manage a small number of devices for free. But nevertheless, Pagi Pro is not mandatory. We will provide more details about Pagi Pro in an upcoming dedicated article.

More

While using WiFi for communication comes with a lot of advantages, it also has its drawbacks. Consequently, in some situations it makes sense to prefer a wired connection, a GSM connection or something else. Therefore we are in constant contact with a manufacturer who is willing to provide us with suitable hardware. Additionally we are experimenting with KNX and some other systems to support as many business cases as possible.

The IOTA Foundation recently presented an access control framework including pay-per-use functionality. Although it will introduce some amazing features, we decided not to use it yet. Development is at an early stage, it does not work with small IoT devices so far and we really don’t need it to achieve the envisioned functionality. Nevertheless we closely follow development and are eager to integrate it as soon as it make sense.

A new official wallet supporting third party apps is currently being developed by the IOTA Foundation. Pagi will provide such an app that enables customers to stream payments, enable access control and much more.

We also plan to provide a map of Pagi devices with filter functionality for all relevant properties like purpose, price or location.

What’s next

Currently we are busy testing the implemented functionality together with some first users. We expect devices being ready for sale in early Q1 2021. Nevertheless we depend on the mainnet release of Chrysalis since it will introduce major protocol changes that would require an immediate firmware update and otherwise render the devices unusable. Therefore we will integrate these changes before we start shipping devices. Other parts of the Pagi ecosystem like Pagi Pro require more time with first releases expected in the end of 2021.

We are also looking for people and institutions with professional expertise in the IoT and payment industry. If you feel addressed and want to help us with knowledge, contacts or financial support for the realization of future activities, please feel free to contact us.

Sources

1. https://cris.brighton.ac.uk/ws/portalfiles/portal/485427/EurOMA-Full+paper+.pdf