Introduction:
We now have a new way of looking and doing transactions thanks to cryptocurrencies. Digital assets (like Bitcoin, Ethereum and other similar cryptocurrencies) have been growing in popularity over the last 10 years and as a result many companies are now looking to integrate them into their financial system seamlessly. The cryptocurrency payment gateways come into the picture here. These gateways act as middlemen to facilitate transactions with cryptocurrencies and FIAT currencies more seamless for brick & mortar shops both from the merchant end, via fast settlement of non-volatile assets,.
They have become more popular as the cryptocurrency markets expanded. But it is important to understand how these platforms work and why they are useful in case you might want to leverage them. So in this article, let us take a deep dive into what cryptocurrency payment gateways are and their workings which makes them an integral part of the modern financial ecosystems.
Online Transactions
What is a Cryptocurrency Payment Gateway?
Cryptocurrency Payment Gateway kind of digital platform or service which enables the merchant to accept payments…These gateways help digital currency to be converted in terms of fiat money (USA dollars, Euro) and a turn around for the timely transactions anywhere at any time from border less without third parties like banks.
Its platforms allow any company to receive cryptocurrency and accept it as a payment, even if the business itself does not hold these digital assets directly. Instead, the gateway will generally convert it into a currency of your choice such one preferred by the merchant so they can get paid without any exposure to fluctuating cryptocurrency prices.
How can the cryptocurrency payments system work?
While doing so, it operates exactly as traditional payment gateways do and opening up a cryptocurrency payment gateway is precise to know some contrasts between customary payments. This is how it works step by step:
Customer Starts Payment: As a customer opts to buy using the cryptocurrency options, then they choose cryptocurrencies listed in the checkout page.
Payment Processing: The payment gateway provides a wallet address unique to each transaction. The customer then sends the corresponding amount of cryptocurrency to this wallet.
Before payment, the transaction has to be confirmed in blockchain. This makes the transfer secure and non-returnable.
Currency Exchange: If the merchant wishes to receive payment as fiat, then this would convert cryptocurrency in its equivalent local currency using current exchange rate.
Once the conversion is successful, funds transfer, the gateway will send its payment to your bank account or crypto wallet and provide you with confirmation of transaction.
The entire process may take a few minutes to some hours, this depends on the blockchain network traffic and chosen cryptocurrency. Others provide fast conversion and settlement allowing instant processing time.
Advantages of Cryptocurrency Payment Gateways
Not just a fad or niche, the demand is real for alternative cryptocurrency payment gateways. Some of the major advantages are :
Worldwide Service and Availability
The great thing about cryptocurrencies is that they are not affiliated with any one country or government. Which allows business to connect worldwide without the stress of currency exchange rates or international banking laws. A cryptocurrency service provider (CSP) makes it possible for a different destination to settle global payments with PSPs, enabling merchants all over the world.
Lower Transaction Fees
Old school payment methods have always been extremely expensive and especially for international payments fees can go through the roof. CRYPTOCURRENCY PAYMENT GATEWAYS save up to 80% on fees (compared to credit card processors or Paypal) especially useful for businesses with international customers in other countries.
Faster Transactions
International transactions in traditional banking systems can require from several days up to weeks for their completion. However, with cryptocurrency transactions, they can be completed in minutes regardless of where the buyer or seller is. Payment gateways enhance the conversion rates by making sure that merchants earn their money fast.
Cryptocurrency Payment Gateway Features
So of course, when it comes to selecting the best cryptocurrency payment gateway there are some features which you should keep in mind before making a decision. So you have ability to search for some of these features:
Multi-Currency Support
Check that the gateway supports many cryptocurrencies. Although Bitcoin is the most popular, plenty of customers also like to buy with other digital assets such as Ethereum and Litecoin or stablecoins. Multi-currency support: A payment gateway with multi-currency features can attract a wider audience.
We reverse the conversion option back to sale under threshold and provide for settlements options.
Businesses have the option to take their payment in cryptocurrency or change it all into fiat money on-the-spot. Look for a gateway that has the enabling of switching conversion and settlement options depending on your business requirement.
Easy Integration
A payment gateway must be able to integrate with the e-commerce platform or website that you currently use. Choose providers that provide plugins or APIs for easy and fast integration.
Security Features
Cryptocurrencies should provide security as a main feature. Make sure the gateway is using strong encryption protocols and has 2 Factor authentication to protect not just you, but your customers too.
Customer Support
In the event anything goes wrong with any transaction or system integration, an effective customer support channel becomes vital. When it comes to managing your business, the last thing you want is for something as small as an email server outage to bring everything grinding a halt unless of course, you foolishly choose not 24/7 customer support.
Issues with Cryptocurrency Payment Gateways
Despite the significant benefits, cryptocurrency payment gateways present a series of unique challenges. Top among them are:
Volatility
These currencies are notoriously volatile, and they can fluctuate further from the time you decide to convert your crypto balance into fiat currency. While most gateways now have rapid conversion to avoid this risk.
Regulatory Issues
However, every country is different when it comes to regulating cryptocurrencies, and business needs vary; you need local laws that keep up with compliance requirements. This could make transactions difficult as the use of cryptocurrencies is either banned or highly restricted in some parts.
Limited Adoption
Today, cryptocurrencies are starting to see more use cases but they still remain less accepted than mainstream payment methods. A small subset of customers are likely unfamiliar with how to use cryptocurrency, so they would need time learn.
Best Cryptocurrency Payment Gateways (Updated 2021)
In response to popular demand, a number of cryptocurrency payment gateways have since come into existence.
Most Popular Platforms
Coinbase Commerce, Coinbase is one of the most popular cryptocurrency platforms, and it operates as a payment gateway for merchants that wish to accept Bitcoin (BTC), Ethereum(ETH) or another digital currency.
Pros: BitPay is a popular payment gateway that allows multiple cryptocurrencies and instant fiat currency conversion. Its low operation cost and easy integration are what it is famous for.
CoinGate For businesses looking for a one-stop-shop that offers both crypto to fiat and vice versa payment solution, CoinGate has their back.
Now Payments is a gateway with support for more than 100 cryptocurrencies, and can easily be integrated into e-commerce platforms such as Shopify and WooCommerce.
Conclusion:
The wide-spread acceptance of cryptocurrencies is only expected to grow as time goes on, and with it the need for trustworthy payment gateways that are safe and easy-to-use. Businesses who do adopt to using cryptocurrency payment gateways, are enabled access a wide tech-savvy customer-base all across the globe; at much faster transactions with lower fees. But as with any fintech, it is crucial to understand the risks and challenges in order for you (and your money) stay on top of profits.
