What is a crypto payment gateway – all you should know about it!
As cryptocurrencies have begun to track greater recognition among people from every part of the socioeconomic spectrum, it has become more important for businesses to keep up with the implementation of these new digital currencies. Needless to say, the more crypto holders there are, the more obvious and convenient it would be for institutions and merchants to accept payments in the form of crypto, too.
The cryptocurrency payment gateways enable all types of institutions or businesses to allow their customers to pay for goods and service fees with crypto rather than with fiat money. This would mean that there is more than one viable payment option, which welcomes more people to take advantage of their crypto assets.
Since the number of crypto users is rapidly growing each year and newer crypto coins continue to appear on the market, it shouldn’t be a surprise that mainstream service providers don’t want to miss out on the opportunity of being up-to-date with differences in the financial world. After all, what matters the most after the customer acquisition act is the assurance of secure financial transactions, which keep on coming without disruption and, therefore, ensure a successful business flow – something crypto payments can facilitate.
This article was edited by our Managing Editor, Angel Marinov. In the last 3 years, he was involved in the business development of different crypto payment solutions, such as crypto payment gateway and crypto banking solutions. During this period of time, Angel realized that there is a massive lack of information on what exactly a Crypto payment gateway is and why a business needs one. That is why we decided to share our knowledge on the topic.
How does a cryptocurrency payment gateway work?
The following is an overview of the process of using a cryptocurrency payment gateway:
- At checkout, the client of the business chooses the option of paying with their crypto.
- The amount of crypto they spend is calculated by the current market value of the digital currency in question.
- The payment system transforms the acquired assets into the merchant’s currency of choice or will transfer crypto directly into the merchant`s account.
- All the money is stored safely in the merchant’s wallet, from which it can be withdrawn and moved to wherever the owner desires.
That brief explanation of the workflow brings us to the conclusion that all the work is done by the crypto payment gateway, which is responsible for all the financial affairs. As a merchant, you don’t have to worry about knowing anything about crypto. Your most important job is to sign a contract with a reliable provider that will be transparent about all dealings with the finances. Also, there are different types of gateways – crypto-to-fiat gateway, fiat to crypto payment gateway, or such that can process fiat-crypto-fiat transactions like X1 payment gateway.
Always make an effort to be updated on the regulations your country imposes on crypto before jumping in business relations with a payment gateway!
Here is a great YouTube video with an explanation of How crypto payment gateways work:
How can I accept cryptocurrency payments?
You can set up a crypto wallet of your own, if you wish to accept the crypto directly. However, if you’re not very knowledgeable and experienced with crypto, the crypto payment gateway is perfect for your needs. This payment processor will be the middleman you need to have, if you wish somebody else to take care of everything related to the acceptance of digital currency payments and on top of that, you get to choose in which fiat currency you wish the gateway to transfer the received assets.
Some of the most renowned crypto payment gateways are Coinbase, BitPay, NOWPayments and AlfaCoins. Each of them supports a variety of crypto coins and has a different range of tools which enable easier completion of greater payouts and management of assets. Some of these providers also offer crypto Point of Sale terminals, with which you can easily accept crypto payments in your brick-and-mortar store.
Read more about Crypto Point of Sale terminals.
Pros and Cons of crypto payment gateways
Being able to provide more than one payment method is of great significance to the well-being of every business. Giving your customers options would prove that you’re a well established merchant, who’s open to improving their services. But there are still many salespeople who are either sceptical of cryptocurrency payments or simply haven’t even made the effort to research how efficient and easy it is to integrate crypto payment gateways in their direct-to-consumer business model.
In order to have a better understanding of what the benefits and drawbacks are of implementing such payment processors, one should take the time to make a research of their own. Luckily, we’ve managed to gather a list of advantages and disadvantages of the digital currency payments and the gateways which enable them.
Pros of crypto payment gateways
- The only intermediary in the payment process is the crypto payment gateway, which makes it more convenient for both the customer and the merchant who can leave all the work to the provider of the service.
- Crypto transactions have lower fees compared to fiat ones.
- The payment process is way faster.
- The gateway allows merchants to accept payments from every part of the world.
- Customers have the option of using different crypto coins to make a payment.
- If there are technical issues, it is the provider of the gateway who will have to tackle them.
Read more about the benefits of accepting cryptocurrency payments for your business.
Cons of crypto payment gateways
- Choosing a secure and reliable crypto gateway provider can be hard due to the great amount of choice there is on the market.
- There’s a chance most of your customers won’t even bother to make use of the different payment methods you provide. That’s why you have to really get to know your target clients before offering them something they’re not interested in.
- Crypto is still considered as a high-risk asset and the volatility of the market is a drawback for many users
Although many believe crypto to be the greatest next thing to happen to people’s finances, there are still many unknowns regarding these digital currencies. It would be unfair to state that just because it has allowed many to make fortunes, that everyone can have the same exact experience with crypto. Acknowledging its benefits for less privileged folks and the security perks of the blockchain technology simply isn’t enough to win the trust of the masses.
However, there are more and more institutions of global importance, which have started to recognize both the perks and the downsides of crypto, which has led to the implementation of more regulatory acts and the raise of awareness when it comes to investing in crypto.
If you feel overwhelmed by this and want to know how to choose the best crypto payment gateway for your site make sure to check this guide.
Zornitsa is the Editor-in-chief at Coinlabz. She is involved in researching the impact of blockchain technology and the way crypto is transforming peoples’ perceptions of finances.