Blockchain technology, which is an underlying technology of cryptocurrencies has disrupted many sectors including healthcare, law, media and entertainment but its impact on the finance and banking system is just unavoidable.
Cryptocurrency, which was originally developed as a medium of exchange, had rather been preferably used as an asset class. But finally the time has arrived when it is slowly transitioning from being an asset for investments to a payment method that can be used in real world transactions.
Nowadays, the use of cryptocurrencies as payments is gaining ground all over the world. From small businesses to big brands, the acceptance of cryptocurrencies has increased in the retail landscape which is indicative of the fact that sooner or later more and more organizations and people will start embracing crypto payments.
However, to make crypto payments successful, the most important thing that is required is a payment processor, so in this context, let’s understand what is a crypto payments processor?
What Is a Crypto Payment Processor?
A crypto payments processor is a system that enables crypto transactions. Put simply, it is an intermediary that takes care of everything that happens in the front-end and back-end of the crypto transaction. It carries out the following functions:
- Registering the data from the sender/payer.
- Verifying it
- Accepting payment from the sender
- Sending data to blockchain
- Converting the coins received as payments to the desired cryptocurrency of a receiver
- Transferring payment to the merchant
- Providing confirmation to both the sender and receiver
While talking about the crypto payment process, it should be borne in mind that crypto payment processors are not the only significant part of the crypto payment process. There are two other elements involved without which it would be nearly impossible to make crypto transactions successful and these are: Crypto payment gateways and Merchant accounts.
What is a Crypto Payment Gateway?
Crypto payment gateway is a software that facilitates direct payment from one crypto wallet to another, that is, between customer and merchant.
The crypto payment gateways are built on a blockchain and ensure that the sensitive wallet related information of the payer transfers to the merchant’s software. Without a crypto payment gateway, merchants can’t accept crypto payments.
But in addition to its core functioning, crypto payment gateways use the blockchain which bear other responsibilities as well like keeping the crypto transactions anonymous and easy.
Top Cryptocurrency Payment Gateways
CapitalWallet is one of the best crypto payment gateway for merchants who want to start accepting cryptocurrencies in their online business. They offer simple API integration which is not only easy to set-up but also facilitates a seamless payment experience. Their transaction and conversion fees are quite competitive in the market as they only charge 0.5% for each transaction and conversion. Along with the 100+ cryptos, a few major cryptocurrencies like Bitcoin, Ethereum, Litecoin, Cardano as well as stable coins like tether can be accepted with this payment gateway. Apart from that they also offer multi-sig wallets which can be accessed by more than one user and can be secured by multiple private keys.
2. Coinbase Commerce
Coinbase Commerce allows merchants to accept cryptocurrencies using API and also offer built-in plugins for eCommerce platforms like Shopify and Woocommerce. Their API can be easily added into the eCommerce website and the average fee charged by them is around 1% per transaction. Coinbase supports ten cryptocurrencies for payments which are: Bitcoin, Ethereum, Bitcoin Cash, Dogecoin, Litecoin, Dai, Ape Coin, Shiba Inu, Tether USD and USD Coin. They offer two types of plans: self managed and coinbase managed (only available in the US).
Bitpay is one of the best crypto payment processor that supports lightning network to let you accept payments instantly at cheaper rates. They support most of the popular wallets like Metamask, Trustwallet, Binance, Kraken and Exodus etc. The cryptocurrencies accepted as payment in Bitpay can be settled in fiat as well as cryptocurrencies. Twelve coins can be accepted with this crypto gateway including: Bitcoin, Ethereum, Bitcoin Cash, Dogecoin, Wrapped bitcoin, Shiba Inu, Ape Coin, Polygon, Euro Coin and some pegged stable coins.
Coingate is another famous gateway that lets merchants accept cryptocurrencies through the state of the art solution. They offer easy to integrate plugins which can be installed with just a few clicks. When it comes to supporting cryptocurrencies for payments, Coingate believes that “more is better”, therefore, it offers over seventy cryptocurrencies as a form of payment. The processing fee in this payment gateway is 1%. Apart from receiving payments, you can also send invoices to the customers. It also supports conversions from fiat to crypto and crypto to fiat.
Coinpayments is a preferred cryptocurrency payment gateway for those who want a simple yet efficient gateway. They support different payment options like payment buttons, APIs and Plugins. Their transaction fee is as low as 0.5% and they also offer auto-coin conversions so merchants can receive the funds in the currency of their choice. Coinpayments offers multi-coin cryptocurrency wallet that can store upto 2,000 coins and also provides Vault to safeguard the cryptocurrencies. Merchants can get paid in major cryptocurrencies, stable coins as well as tokens with Coinpayments
Merchant account is more like a bank account where all the information about payment transactions is collected and funds are stored. You can log in to your merchant account to check your transaction history, track your balance, get transaction confirmations and updates etc.
Benefits of Accepting Crypto Payments
For so many decades we have only used fiat as a payment method but in the last few months or years this has completely changed. There has been a significant increase in the adoption of crypto payment.
Many first movers were quick enough to upgrade their payment options and introduce crypto payments at the point of purchase, thus there’s a higher likelihood of cryptocurrency payments becoming mainstream.
For those, who are still reluctant, here are the most important benefits of crypto payments that will help you understand why you should be accepting payments in cryptocurrencies:
1. Lower fees
Cryptocurrency transactions have faster settlement cycles due to the less number of intermediaries involved compared to the traditional transactions. Therefore, it involves less operational costs, enabling merchants and customers to avoid unnecessary fees.
2. Seamless cross-border payments
Since cryptocurrencies are global currencies and not tied to any country, they are not reliant on a centralised financial system to get cleared. Therefore, for merchants who have overseas clients, cryptocurrency payments may offer seamless transfer of payments from one country to another as they are quick and less expensive. Nomatter where users are located they can instantly send and receive crypto payments given that they have a secure internet connection.
Cryptocurrency transactions are immune against data breaches. Since every transaction is verified and recorded on the blockchain ledger, it is impossible to temper with any transaction. Therefore, crypto payments can enhance transparency and reduce the risk of fraud.
4. No chargebacks
Reversible centralised transactions come with a burden of chargebacks but since crypto transactions are irreversible in nature, one can easily get rid of this problem. Any transaction made in cryptocurrency is permanent. In case, someone requires a refund, they have to talk to the receiver and convince them to pay them back manually.
5. Increased customer base
Crypto payment is a huge technological advancement. So, by integrating a cryptocurrency payment gateway, you can establish your business as a crypto-friendly one. It will go out as a message to your customers that your business is progressive and believes in providing cutting-edge technology.
Risks of Accepting Crypto Payments
1. Price Volatility
Cryptocurrencies are anything but volatile and this is its biggest drawback. The price of cryptocurrencies jumps back and forth due to which it becomes really hard to use it as payments. These are extremely sensitive to news releases. Therefore, even if one day, the price of bitcoin is touching the sky, it’s highly possible that another day it can fall down to its lowest level.
The emergence of stable coins has tried to resolve this issue. As the name suggests, the value of the stable coins remains constant. This is why they have become more popular as payment currencies compared to the volatile cryptocurrencies.
Finding the Right Payment Gateway
Now that you know what a payment gateway is, how it works, what are the advantages and risks, the next big challenge is figuring out the right cryptocurrency gateway for your needs.
Every merchant wants to make their payment process easy, smooth and secure. In this light, it’s important that you spend enough time evaluating different options so that you can choose the best payment gateway for you.
Here’s a quick guide that will walk you through the process of finding the right crypto payment gateway:
Cost is perhaps the most important factor in choosing the right cryptocurrency payment processor. When you are looking for a crypto payment gateway, you should thoroughly check all the costs that you will be required to pay to your crypto payment platforms and these include set-up fees, transaction fees, conversion fees, deposits and withdrawals fee. The lower the fees, the more profitable it is for you.
2. Accepted Coins
To enhance the customer experience, it is important that you as a merchant provide your customers with different cryptocurrency options they can use to pay you in. This doesn’t mean that you should offer all the cryptocurrencies that are available out there but at least offer the most important coins in which the payments are widely made.
The ability to swap between cryptocurrencies and fiat currencies directly into your merchant account can make the process a lot easier for you. Some crypto payment gateways provide auto-conversion features while some let you convert cryptocurrencies manually. You need to make sure if the payment gateway supports the conversion in the crypto or fiat currency of your choice.
Payment gateways these days offer different integration methods like API, Plugins and Payment buttons etc. Therefore, while picking up a payment gateway, you should check what all ways are there to integrate the gateway into your website.
5. Customer support
As a new merchant navigating the crypto payment world, you may require customer support on many occasions which can be during the registration process, integrating the gateway or during settlements. At such crucial moments, the ability to quickly connect with the customer service is extremely important. So, make sure that the customer support is highly responsive and competent with your enquiries.
6. Company’s reputation
No matter how attractive deals the payment platform offers you, in the end you would only like to settle with the one that’s reliable and trustworthy. Therefore, picking a regulated payment gateway is one option to ensure protection of your funds. Apart from that you can check customer reviews, read guidelines of the financial regulator that supervises the payment gateway as well as terms & conditions of the payment gateway provider to make an informed decision.
The Bottom Line
Choosing a crypto payment gateway is about finding the right fit. Each payment gateway varies from the other in terms of its features, fees, security, supported cryptocurrencies- so it’s worth it to find out what matters the most to you as this will help you find a payment gateway that’s just right for your needs.
To conclude, crypto payments have the potential to enhance the overall payment experience. Therefore, when looking for an alternative payment method for your business, it is a good idea to consider crypto payments.
There’s no doubt that in the near future, cryptocurrencies can rapidly become popular across the globe so it’s better to adapt yourself to this change already.