Crypto-Enabled Payment Gateways

Users across the world are now recognizing the potential of crypto payments more than ever before.

Security, slashed transaction costs, borderless nature, heightened security, and innovation, are some of the benefits that have driven over 560 million people to own crypto worldwide.

In this blog, we explore why crypto-enabled payment gateways are becoming popular amongst businesses too.

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What are crypto payment gateways?

Crypto payment gateways allow purchasing goods and services using crypto as a method of payment. They authorize the transfer of these digital assets by acting as the intermediary and facilitating their conversion to fiat money or safekeeping (as desired by the business).

There are multiple benefits associated with businesses partnering with crypto payment gateways. Businesses get access to a completely new set of audiences who prefer using their digital currencies to transact. This opens up a new avenue for profit and creates a unique business reputation in technological innovation.

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Advantages of crypto-enabled payment gateways for customers

Here are the benefits of crypto-payments for customers:

1. Heightened security and protection

Blockchain technology of crypto is decentralized and encrypted. These properties offer transactions that no one can override or get control of, making them highly secure with lower chances of frauds.

2. Better financial control

Crypto offers owners with undisturbed access to their funds. Traditionally, multiple factors like account bans cut users' access to funds, while in crypto-enabled payments, users have complete ownership and autonomy over their assets.

3. Seamless global reach

Payment gateways have made it possible for users to transact or buy goods and services with no geographical boundaries. It includes sending remittances across countries with absolutely no interference from any financial institutions.

4. Instant payments and settlements

Payment processing and settlement of a transaction may take some time, especially if it is a cross-border transaction. Crypto payments on the other hand are processed instantly, giving customers the benefit of faster settlements and a better shopping experience.

5. Access to financial inclusion

Crypto demands no bank account to be able to transact. Just with access to the internet, it offers low-cost transactions and equips the underbanked and the unbanked population with financial tools.

6. Added rewards and incentive opportunities

Crypto payment gateways have found ways to reward users for transactions with digital assets. They offer tokens, yield farming opportunities, and reward programs that add to the value of their digital assets ownership and financial well-being.

7. Enhanced privacy

The decentralized nature of crypto offers supreme privacy and anonymity. Customers can make purchases without providing their personal data which can be misused when breached.

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Advantages of crypto payments gateways for businesses

Now here are the benefits of crypto for businesses:

1. Slashed costs

Merchants do not have to pay a sum of money as huge as a normal transaction fee while dealing with crypto payments. It helps merchants retain more sales per transaction, ultimately resulting in greater revenue.

2. Global reach

Cross-border transactions attract regulatory restrictions across currency conversions and terms that are not a concern with crypto. This gives businesses the chance to sell anywhere and to anyone without geographical restrictions.

3. Chargeback management

Crypto payments come with security, so there’s little room for disputes to arise, which ultimately leads to chargebacks. Plus, transactions in crypto are irreversible, further reducing the chances of chargebacks to occur. Not having to deal with chargebacks helps merchants save on management costs, time, effort, and resources.

4. Marketing edge

There aren’t a lot of merchants accepting crypto payments for their products or services. Choosing to walk this path gives merchants a unique market value and tech-first selling proposition that can help build their brand’s affinity and ramp up sales.

5. Customer retention

Crypto payment gateways have also incorporated tokenized loyalty programs for their partner’s customers. Such branded tokens offer discounts, merchandise, or other offers as set by businesses, who can use this feature to attract and retain more customers.

6. Automation prowess

Cryptocurrency development requires the deployment of smart contracts which offer automation capabilities. Smart contracts help automate business areas like contract execution, payment settlements, and supply chain management. And, automation helps with efficiency, errors, disputes, and mundane work.

7. Instant settlements

Crypto payments are processed faster which not only is a benefit for customers but helps merchants with better cash flow management. Merchants can use better access to cash for reinvestment, bill payments, or innovation capabilities.

8. More revenue

Micropayments and microtransactions are possible with crypto as payment. Being able to accept such payments with low fees attached to them opens up new revenue streams for merchants.

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How do crypto payment gateways work?

Here’s how payment gateways enable crypto payments:

Step 1 - Customers come across and select the payment method of crypto and their desired currency on the checkout page.

Step 2 -  If the merchant wants, the gateway facilitates the conversion of cryptocurrency to fiat money according to the ongoing exchange rate.

Step 3 - The gateway now confirms and generates a payment address to link it to the transaction. The cryptocurrency amount must be transferred from the customer’s wallet to this business’s address.

Step 4 - Upon receiving the payment address details, customers now transfer the amount, which is then broadcast to the appropriate blockchain network.

Step 5 - Now comes the consensus process where the transaction is verified throughout the blockchain network.

Step 6 - After the confirmation of the transaction from the blockchain network, the merchants are notified.

Step 7 - If the merchant wants to retain ownership of the cryptocurrency received, it is transferred to their crypto wallet. Otherwise, it is exchanged for fiat money according to the ongoing currency exchange rate.

Step 8 - Finally, the customer is notified about the confirmation and transfer via an email or on-screen notification.

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Top crypto payment gateways

While payment gateways like Payby offer most payment modes, here are some other options:

1. Coinbase Commerce

A Coinbase product, this crypto payment gateway allows merchants to accept Bitcoin, Ethereum, and Litecoin as payment methods. It supports many crypto-enabled benefits like instant settlements, customizable checkout options, and detailed analytics.

Speculations are that this gateway is a great option only for merchants getting started. Its 1% transaction cost is a major loss of revenue for a large transaction volume. There’s also a compliance issue with Office of Foreign Assets Control (OFAC) regulations which limits its global network. Other demerits include manual refund request management for merchants.

2. BitPay

BitPay is a popular gateway option for merchants because it supports accepting Bitcoin and Bitcoin Cash payments through online and in-person channels. Features that make BitPay one of the top choices include, quicker settlements, automatic fiat conversion, multiple currencies support, a user-friendly interface, robust security measures, and more.

Regarding the demerits to be wary of, BitPay has no free plans which might be heavy on your business’s wallet, and it has a waitlist for businesses looking to get a new business account which can delay their crypto-enabled payments adoption.

3. PayPal

PayPal has established itself in online payments and has moved to crypto-enabled payments now. It offers the best of both the worlds of fiat and digital currencies-enabled transactions, in one place. Some of its attractive features include crypto price alerts and a streamlined crypto transaction process.

Among the drawbacks include better compatibility for personal accounts as opposed to business requirements, geographical restrictions, a limited number of cryptocurrencies, and a lack of e-commerce integrations.

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Popular cryptocurrencies used for payments

Here’s a detailed look at popular cryptocurrencies widely used for payments:

• Ethereum - It facilitates decentralized applications (dApps) and smart contract-driven payments that process transactions faster. Ethereum is known for its contribution to enabling DeFi and NFTs.
• Litecoin - If you are looking for a faster, more affordable digital currency as compared to Bitcoin, Litecoin will appeal to you. Litecoin crypto transactions are faster because their block time is 2.5 minutes. Additionally, it has low fees.
• Bitcoin cash - As an initiative to complement Bitcoin, BCH has a bigger block size, is faster, cheaper, and is a great option for daily transactions.
• Ripple (XRP) - XRP’s best use case is for low-cost cross-border payments. Its RippleNet network offers settlements in real-time and hence is the choice for brands looking for better international payment systems.
• Binance coin (BNB) - Built initially as a utility token, BNB has grown to incorporate multiple features. It facilitates transaction fee discounts and merchant payments and is popular across the Binance ecosystem and other platforms​.

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How can businesses adapt to crypto-enabled gateways?

Incorporating a crypto payment gateway into your ecosystem and being able to accept crypto payments might get tricky. Here’s how to make the transitions smooth:

1. Assess Demand and Compatibility

Study your customer base closely to evaluate if they are ready for and need crypto-enabled payment gateways. Study the market trends to assess if there’s demand and if your business ecosystem can integrate with the new payment method.

2. Choose a Crypto Payment Processor

Your choice of a crypto payment processor like Payby affects integration, adoption, and customer experience. Do your homework to assess which processor can facilitate this smooth transition yet add value to your business.

3. Set Up a Cryptocurrency Wallet

Your business needs a cryptocurrency wallet to receive and store digital currencies earned from transactions. There are multiple types of wallets like hot wallets for immediate access and cold storage for more secure long-term storage. Make the right call.

4. Integrate the Payment Gateway into Your Website or POS System

You need your crypto payment processor to integrate into your existing payment systems, be it website or point-of-sale (POS) systems. Processors like Payby assist well with both online and in-store purchases.

5. Set Up Automated Fiat Conversion (If Necessary)

To avoid volatility risks of conversions, some merchants prefer automated and instant conversion of digital assets to fiat money. This is a choice and depends on the merchant entirely.

6. Define Payment Policies and Update Terms

Ensure your business terms and conditions as well we payment policies reflect how you plan to deal with crypto-enabled payments and make the documents public. Include factors like refund procedures, transaction fees, and more.

7. Implement Security Measures

Deploy strong security measures such as two-factor authentication (2FA) and encryption, to protect both customer data and business assets. Keep monitoring wallet security and transactions always.

8. Train Staff on Crypto Payments

It is critical for your employees to know the nuances, do’s, and don’ts of crypto payments. Train them on how to process crypto payments and troubleshoot any issues.

9. Test and Monitor User Experience

Test the newly integrated system before launching it to the public. Make sure there are no issues that can affect user experience. Also, ensure to keep doing routine checks post-launch.

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Conclusion

The market is changing and so are the customer’s needs and demands.

You need to access and incorporate the latest payment methods into your ecosystem to not lose customers of any sort, and Payby can help you get there.

Get started with Payby today.