To make payments easier, a crypto payment processor acts as an intermediary between the sender and recipient. It’s usually operated by a company or exchange, and it helps businesses get paid in crypto in a much easier way. Though it’s not mandatory to embed a crypto gateway into the merchant’s processes, the companies enjoy many benefits, including lower volatility, higher security, and the ability to receive a wide range of coins. CryptoProcessing is among the most popular companies that help both small and established businesses receive and settle crypto payments. This guide explains all the ins and outs, helping merchants make the right choice and streamline their operations with online payments.
What are cryptocurrency payments and how do they outperform legacy payments online?
Cryptocurrency payments are transfers of value that are recorded on the blockchain. Such payments are impervious to any efforts to run chargebacks and cancellations. More and more customers are getting used to paying in crypto, urging merchants to embed the respective payment options on their sites.
You might wonder why cryptocurrencies and other alternative payment methods like digital wallets are gathering steam lately. The answer relates to how customers look to brands to deliver a more convenient and user-friendly experience as the online trade matures. Payments in crypto help merchants take their service to the next level.
Such payments offer enticing benefits:
- Much lower fees: Compared to some crypto payment processors who engage in predatory practices, blockchain-recorded payments usually feature much lower fees.
- Decentralization and pseudonymity. The absence of a centralized controller prevents any blacklisting and restrictions to access. Anybody with an Internet connection can enjoy payments in crypto, while banks and governments aren’t able to ban such entities or block their transactions.
- Borderless crypto payments. Blockchain knows no borders. Users around the globe transact easily with transfers being done in seconds or minutes at most. This compares favorably against legacy financial systems that take 2-3 business days to settle.
- Immutable transactions. Nobody can make changes to transactions after they’ve been recorded on the blockchain. This eliminates the risk of chargebacks and cancellations that are getting out of hand in legacy online payments and causing a lot of problems for merchants.
Paying with cryptocurrency is set to grow in popularity both with customers and merchants. Eliminating almost all of the intermediaries, blockchain technology delivers major benefits to all stakeholders involved. However, merchants would quickly realize that having a friendly payment gateway on their side takes away all the hassle. Next, we talk about the underlying mechanics for such blockchain payment processors and delve into the pros and cons.
How does a cryptocurrency payment gateway work?
Customers pay in any currency they wish. Crypto payment gateway immediately converts the coins into another medium that the merchant wishes to receive and credits the amount to their account.
That was a broad-strokes outline of the process, and here’s the nitty-gritty:
- Customer picks a product and proceeds to the checkout page in an online store or pays offline.
- Customer can see a wide range of crypto coins being accepted, which makes it easy to pick the one they like most.
- Customer copies the wallet address that the crypto payment processor shows and makes the payment in their wallet.
- All top coins come with their own wallets and underlying payment systems that run on the blockchain. Within those on-chain systems, validators confirm the transactions and add the data to the immutable ledger. They charge a small fee that the payment processor passes on to the customers.
- In addition, payment service providers charge their fees. While some companies might go overboard, CryptoProcessing.com applies a flat 1% fee on all of your customers’ in-crypto payments, making it easy to calculate the costs that you might incur working with this provider.
- Merchants receive the amount that has been automatically converted in the medium they wish to receive – this can be a specific crypto, stablecoin or fiat currency. In this way, businesses enjoy a hassle-free payment processing environment and don’t have to worry about excessive volatility.
- Merchants withdraw funds to their external accounts or retain the received money at the internal account with the crypto payment gateway so that they can easily pay their affiliates and partners.
In addition to handling the incoming payments, payment service providers can assist in processing large-scale amounts via their OTC desks, creating detailed reporting and dealing with tax-related matters.
At the first glance, the internal processes might seem pretty simple, but the teams with payment processors need to implement rigorous protection and verification systems, identify “dirty” Bitcoins and other coins and ensure effective interoperability with the underlying blockchains. Thus, the main advantage of integrating a crypto payment gateway is avoiding a hassle of fixing the myriad of technical issues.
Advantages and disadvantages of payment gateways
Crypto-to-fiat payment processors allow customers to settle in fiat, easily accept a large number of cryptocurrencies, enjoy higher security and protection against hacks, as well as eliminate the unwanted volatility.
Advantages of cryptocurrency payment gateways
1. Settlements in fiat
The key benefit of using a payment gateway comes forward when a merchant is just starting to expose their business to cryptocurrencies, and they aren’t sure how to enable their users to pay with crypto. Payment gateways allow merchants to enjoy an almost instantaneous conversion of funds into the major fiat currencies and settlement of the funds into the merchant account. As a result, companies can safely dip their toes into processing crypto, while also receiving payments in the medium they wish to use.
2. A variety of crypto coins processed by gateways
Business owners might find it onerous to set up and manage wallets for a multitude of crypto coins. A well-diversified payment processor like CryptoProcessing.com alleviates these problems and allows businesses to limit their exposure only to those assets that they are willing to receive to their merchant account.
For instance, CryptoProcessing.com enables transactions in up to 50+ major payment cryptos, 20 fiat currencies, as well as SEPA and SWIFT payments. When comparing the available solutions, variety of coins is a major factor that should be taken into account.
3. End-to-end security assurances
Integrating with third-party crypto payment providers helps companies avoid dealing with a hard task of assuring security across the architecture used in online payments. Although companies can develop and implement their own self-hosted payments processing architecture, this inevitably opens them to a need to deal with various issues, including PCI compliance, anti-phishing measures, effective processing of blockchain payments and fast conversion across a large number of coins.
Each of the issues enumerated above will require special attention, resources and time to be invested by a merchant’s in-house team, and dealing with them will divert resources from the core activities that the merchant is in business of.
In comparison, an effective cryptocurrency payment gateway would take care of all such facets that undergird the online payments, allowing a merchant a wide variety of payment set-up options, including redirect solutions, hosted and fully designable front-end systems, payment links and invoice/billing functionality.
4. Volatility shield
A high number of unpredictable fluctuations in the prices of cryptocurrencies can pose a major problem for business owners, who aren’t willing to speculate on the coins’ prices and just seek to set up sustainable business operations.
Crypto payment processors serve well in this regard as they utilize their reserves in order to fully take out the volatility out of the equation.
Merchants find it easy to enjoy sustainability and full elimination of any volatility risks both when getting paid in crypto, as well as when performing mass payouts to partners and affiliates.
In addition to benefits, there are some points that merchants should pay attention to when considering an integration with specific systems.
Disadvantages of cryptocurrency payment gateways
1. Need to trust a third party
The crypto-based transactions were created to bypass any intermediaries. Integrating with a payment gateway will make you dependent on another team’s efforts in payment processing.
2. Additional fees
Be careful not to fall prey to services that charge exorbitant fees. Look for partners like CryptoProcessing.com that are ready to offer flat and easy-to-understand fee mechanics.
3. Reliance on business continuity
Going with an established system pays off as you won’t have to worry about potential interruptions in services and other issues.
Now that we’ve covered the basics, let’s see how you can safely test the waters with crypto-enabled online payments.
How do I accept payments with cryptocurrency?
Share your wallet address with a single customer or integrate with a gateway to process payments in bulk. Specify the cryptocurrency you want to get paid in. Check the gas fees before you receive payments to understand the internal fees.
Major crypto payment gateways/processors/services like CryptoProcessing.com enable various methods to accept payments in crypto:
- A redirect solution, where customers need to click through to a processor’s page. This option won’t feature your branded design, but it’s the easiest one to roll out.
- Self-hosted gateway, where customers stay at your site and you are in full control of the overall customer experience.
- Payment links, handy for processing cryptocurrency payments in social commerce
- Invoicing and billing methods for recurring and B2B sales
Growing adoption attracts teams who set up versatile payment gateways, but picking the best solution requires careful consideration.
Which payment gateway is best for cryptocurrency?
Pay attention to licenses and security assurance. Fees of 1% are a must-have. Look for additional features such OTC desk, reporting and effective support. Coins variety is important.
Analyzing the above features will allow you to single out the best crypto gateways and reach out to the chosen teams with a request for more information.
Connect with viable candidates and ask about how they can assist your team when dealing with specific use cases, including one or several of the following:
- High-amount cryptocurrency payments that are best fit for processing via the OTC desk
- Specific needs in reporting and support in handling taxes
- Mass payments to partners
- Business processes that involve multi-step billing and invoicing
In this mini-guide to all things crypto payment processors, we shared the main pros and cons of such systems. We also analyzed how the crypto payments benefit businesses and the society overall, and looked at how the crypto-to-fiat gateways run under the hood. A simple way to start accepting funds in crypto is to set up a processor that fits your specific needs and use cases in the best way.
