Crypto payment processing refers to transaction processing made in cryptocurrency. Gradually, cryptocurrency is becoming a popular means of payment like fiat currency. This has created a new process referred to as crypto payment processing which is the processing of cryptocurrency payments.
On the other hand, cryptocurrency payment refers to payments made with cryptocurrency as a payment means instead of fiat currency. While there are several advantages of using cryptocurrency payment processing, there also exist some downsides that you must consider if you choose to use this model for your business.
- Cryptocurrency transactions are very fast in processing transactions and the blockchain technology which it uses is also secure.
- Crytpcorrecny payments are decentralized. This means they aren’t controlled by central institutions of authority which makes the transactions cheaper, secure, and faster.
- Many cryptocurrencies provide a high level of anonymity, which is essential for individuals who value security and privacy.
- Cryptocurrency payments can be made from every place in the world with no restrictions on who can receive or make payments.
- Since intermediaries are not involved in the process, the transaction fee of such payment is quite lower than the traditional payment methods like bank transfer or credit cards.
- A major demerit of cryptocurrency payment processing lies in its high volatility. For instance, the price of BTC to USD can change in just a minute, making it hard to buy or sell. So, businesses that intend to accept cryptocurrency payments can risk getting less than they intend.
- In many countries, cryptocurrencies are not yet legal tender, therefore it is difficult to accept such payments.
- Finally, the IRS considers cryptocurrency a property that is usually taxed at its value when received. Therefore, if your cryptocurrency loses its value after you have been taxed, you are liable for paying the full value of the tax at the time you received it.
In recent years, cryptocurrency payment processing has grown alongside the increasing need for fast electronic payment globally. This strong need for cryptocurrency payments has been a major factor in increasing the growth of crypto payments. There are several reasons why you should begin accepting cryptocurrency payments, they include:
- Reliability: Traditional banks can sometimes decline transactions for several reasons like a casino website payment. When such things occur, cryptocurrency might be the best solution. Blockchain wallet is unable to black a transaction.
- Geographic coverage: With cryptocurrency, there is no need for landscape fragmentation. Individuals can pay for their products or services from anywhere or country. This is usually nt possible with e-wallets, or cards.
- Withdrawal speed: It usually takes about a week to process an e-wallet withdrawal in certain industries, but cryptocurrency is faster.
- Cost efficiency: Cryptocurrency transactions are usually about 1% of the amount.
A cryptocurrency payment gateway refers to a digital currency payment processor. It is just like getting bank credit cards. With cryptocurrency gateways, individuals can collect digital payments and then immediately receive the fiat currency equivalent.
As cryptocurrency begins to be accepted as payment by more merchants, such companies remove the reservations or uncertainties businesses may have about cryptocurrency and let them provide more diverse payment options.
However, it is essential to know that having a digital payment gateway is not required. You can decide to use your personal wallet to accept payment in cryptocurrency. However, using a cryptocurrency payment gateway means you don’t have to exchange the cryptocurrency for fiat currency and manage the wallet.
Cryptocurrency payment gateway companies are removing the risks associated with cryptocurrency payments through the use of their wallets to enable transactions between a customer and a merchant. The workflow of cryptocurrency payments includes:
- The customer chooses to make their payment in cryptocurrency at the checkout such as on the web, in-store, or in the app.
- They pay an amount that equals the digital currency in a fair market value at the transaction time.
- The cryptocurrency payment service converts the payment to your chosen currency.
- The money is then added to your provided bank account at intervals based on your service contract.
For fees, providers use cryptocurrency wallets for facilitating transfers. When the currency is made with a payment system, the payment provider incurs the fees charged by the currency network transaction validators. The transaction and blocks will be verified by transaction validators in the blockchain. This is done an exchange for their computational power and energy use. These fees will be passed on to you, while also charging their service fees, so they can continue offering and operating their services.
With a cryptocurrency payment gateway, businesses get a dynamic solution for borderless, efficient, and cost-effective payment methods. While they provide several benefits like security and decentralization, every business owner must also navigate its challenges such as regulatory concerns and volatility.