The financial sphere is constantly evolving and changing especially with the appearance of cryptocurrency. With the creation of virtual money, the system has changed tremendously and users around the globe can feel it. A lot of limitations and restrictions have disappeared because of crypto payment gateways.
Crypto payment gateways are a kind of intermediaries that help to accept payment in the crypto. With these gateways, clients can send payments via mobile apps, sites, and offline stores to the merchants.
With this new solution, merchants can now receive crypto payments to their bank account without the necessity to actually open a crypto wallet. These gateways are rather useful, because merchants can get payment from clients around the globe, and don’t have these international fees that scare some customers.
The crypto payment getaway is not only a secure method for merchants but also a great option for clients. Users can apply this technology to transfer virtual money from one wallet to another. The transparency of these processes is guaranteed by the blockchain technology.
Demystifying the Inner Workings of Crypto Payment Gateways
Crypto payment gateways appeared as a reaction to the businesses’ need to be a part of the crypto market. Of course, it is not a free service and customers will pay a fee for such transactions. For this purpose, the merchant should get an account to receive payments.
Let’s proceed to the actual description of crypto gateways withdrawal and deposit processes.
- Once the user is on a certain site, there will be several options of crypto deposits to pay with.
- Also, the QR code will be available for the customers.
- Here users should choose what variant works better for them. Either copying the address or choosing another option and using QR. When picking and paying via the code, that will immediately open a crypto wallet.
- In case, you are choosing an address, then the process will be manual. You should paste this address into the infrastructure of the app.
- During the initiation of the transaction, the received amount of the virtual currency will be automatically converted to the fiat balance.
- Merchant system will get an API callback that will have all the important data about the status of the transaction, free, amount, and more.
- The process finishes when the currency is on the balance of the client on the merchant website.
- The crypto payment withdrawal is available for the users and they can pick what kind of crypto they want to get.
- To start the process, clients should specify the address.
- The request should be made from the website.
- The exchange process of fiat currency into the chosen money is conducted automatically.
- Once it is done, API call back will be in the system with the information about the status of the transaction.
- The success of the process will be noticed when the balance is decreased.
Distinguishing On-chain and Off-chain Crypto Payment Gateways
The main difference between the off-chain and on-chain crypto payment gateway is in the method of processing. Off-chain crypto payment is done outside the blockchain. This means that the speed of the transaction will be higher and the fee price will be lowered. However, you will not get the same transparency as with Off-chain transactions. The security of this system is also high because the details about the transactions will be in the blockchain mainnet.
As for the On-chain payment gateway, the processing of the transactions is held on the blockchain. The details about the transactions are in the public ledger. The biggest advantage of the on-chain when compared with the off-chain is its immutability and transparency. The drawback of such transactions is the time needed for the process completion and higher fees.
Exploring the Advantages and Features of Cryptocurrency Payment Gateways
There are lots of advantages of crypto payment gateways for individual users and businesses. Here we will discuss a couple of benefits that make crypto payment gateway really convenient method and still increase its popularity.
1. Seamless, Swift, Cross-Border Transactions
Any currency creates some restrictions according to the territory where it is used, the amount of the money is strictly regulated by the government, and more. With virtual currency such as crypto, there are no longer borders between users. It doesn’t matter what country or region the customer is in, the only thing that is needed, it is an internet connection. That makes cross-border transactions quicker and of course cheaper, because crypto users are not paying international fees as in all bank transactions. Moreover, there is no money conversion. For instance, there is no need to convert USD into EURs and vice versa. This exclusive freedom is only available for cryptocurrency payments.
2. Fortified Security for Your Transactions
Security has always been a crucial factor for the users of the crypto payment gateways. For guaranteeing the needed level of security for the clients, there are used lots of methods. For instance, cryptocurrency payment gateways use cold wallets for the storage of the funds, SSL encryption method, and 2-factor authentication.
All these methods fortify the crypto transactions greatly and that attracts new clients.
3. Upholding User Anonymity
Crypto payment gateways have not only the needed privacy level but also anonymity for all the participants. This anonymity is possible because no one has access to the personal information during the transaction. Merchants as well as clients can see only the address of the transaction. In such a way, you are fully hiding your identity, and that is fantastic.
4. Reduced Dependency on Intermediaries
The more intermediaries are involved in the process the higher security risks and some leakages of information. When speaking about the cryptocurrency payment gateways, there is only one intermediary which is gateway. If there is only one participant involved, then the possibility of some troubles is minimal.
5. Resilience in the Face of Payment Challenges
The users of mobile crypto wallets or just individual crypto wallets can face real difficulty when something is not working as needed or crypto is stuck somewhere. Unfortunately, no one can help with such issues and the user is one-on-one with this challenge. When choosing crypto payment gateways, there is always professional help available for solving transaction problems and more. So, the chosen provider can be really helpful during such difficult situations.
Cryptocurrency vs. Traditional Fiat Payment Gateways
The concurrency between traditional and crypto payment gateways exists and it is a good sign that motivates the improvements of both systems. Let’s discuss some of the major characteristics and differences between fiat and crypto payment gateways.
The first distinctive factor is control. For a fiat payment gateway, the whole process is controlled by the 3rd party while crypto usage guarantees that there is no influence from any organizations or government.
As we have already discussed, a crypto payment gateway involves only one intermediary while fiat payment has multiple. The time during which the payment is conducted is almost identical and could be anything starting from a couple of seconds and ending in a couple of days.
The charges for global transactions are lower in cryptocurrency and higher in the fiat payment gateway. As for the chargebacks, they are almost minimal with crypto and really high with fiat.
The last important factor when comparing both gateways is security. There are different approaches to this topic, cryptocurrency offers a high security level with a decentralized system and several cryptographic techniques. With fiat, the system is centralized, and that increases the risks of hacking.
Key Considerations for Selecting the Right Crypto Payment Gateway
Here are a couple of considerations for choosing the right crypto payment gateway:
- There should be real-time conversion of fiat, in order not to overwhelm the clients with the search for an additional add for this purpose.
- The provider should offer the possibility to make cross-border transactions and scalability.
- Check if a chosen provider has an additional setup fee. If yes, then you should better search for another variant. Usually, reliable platforms don’t charge anything for such kind of service, because it can be easily set up without any additional assistance.
- Reputable providers offer lots of options for the clients such as management of several accounts, e-commerce plugins, invoices, and more.
- Check the users’ comments and test whether issues of other clients are relevant to your specific case.
The functioning of cryptocurrencies is relatively easy to understand, however, the real usage may be sometimes challenging for new clients. Here crypto payment gateways might be really helpful as a flexible method of online transactions.