Crypto Merchants Solutions – A Guide to Accepting Crypto Payments

Beginner’s Guide / 02.11.2020

As cryptocurrency grows and expands into the mainstream, its ability to disrupt banking and payments continues to be magnified, and crypto payment gateways are one of those ways.

Crypto beginners see cryptocurrency as a store of value, and while it currently is a store of value, albeit a volatile one, this point of view is quite limiting. More emphasis should be placed on improving crypto solutions, strengthening security, providing liquidity, and improving DeFi than trading and hodling.

The reason is that cryptocurrency, while purely digital, is still currency, and as such, is meant to circulate the economy and be used for financial transactions like everyday payments. This is where crypto merchants and payment gateways come in.

What is a crypto payment gateway?

The major difference between a crypto payment gateway and a fiat is that the crypto gateway processes cryptocurrency while the fiat gateway processes fiat currency. Most other tasks remain similar, so to understand a crypto payment gateway, you’ll first need to understand how a payment gateway works.

How a payment gateway works

A payment gateway is a software application used to process payments on merchant sites. This software acts as a connector between the merchant site, the processing service provider, the acquiring banks, the transaction network, and the issuing bank. Here’s how it works.

A customer purchases something on a website and pays using their credit card. The payment gateway asks for their credit card info and other payment details (like what they bought) and sends it via a secure server to the payment service provider (PSP). The PSP uses or is an acquiring bank and then sends the transaction through a global payment network (think Visa or Mastercard) to the customer’s issuing bank who checks the buyer’s funds and approves or declines the transaction.

The issuing bank sends a response to the payment service provider, who forwards it to the merchant and the customer whose card was charged. The entire transaction happens in under 3 seconds. In essence:

  • The buyer pays using a credit card.
  • The credit card and transaction info are sent to the payment service provider.
  • The payment service provider sends it through a global payment network to the issuing bank, i.e., the customer’s bank,
  • The bank approves the transaction and sends a response to the payment service provider.
  • The payment service provider forwards the message to the merchant.
  • The customer’s bank sends the customer a debit alert.

Easy as pie.

However, this system involves too many intermediaries that leave too many chances for fraud and delays. International transactions may involve more intermediaries, slowing down the entire process; cross-border approvals are known to take days. This system may be efficient for domestic transactions, but international transactions are a different story.

How a crypto payment gateway works

Crypto gateways use smart contracts to execute transactions between merchants and buyers processed on a blockchain to guarantee their security. Although transactions on blockchains like Bitcoin can take up to 10 minutes, this is the longest time merchants will have to wait to receive payments.

As slow as this may seem, the alternative, i.e., central payment gateways, could take up to three days to process international payments. These payment transactions are opened and closed using smart contracts that execute commands verbatim, reducing the possibility of fraud.

The gateway provider builds and deploys its software, taking various forms, and integrates it with the merchant’s website or PSP application. At the same time, the buyer uses a crypto wallet to pay in supported cryptocurrencies, usually via a QR code.

The gateway could take various forms: a shopping cart API that integrates with existing platforms, a “buy button” on the website that uses a QR code to facilitate fund transfers or a mobile app. Companies that develop these solutions usually provide custom options.

Why Crypto Gateways?

  • Crypto gateways are decentralized and involve two parties, the merchant and the buyer. Funds do not move between intermediaries and, as such, are more secure.
  • The global nature of blockchain networks negates the problem of distance. International payments don’t take long to be processed, and merchants can accept payments from anywhere in the world.
  • Third-party approval from banks is not needed. Centralized gateways require approval from the buyer’s issuing bank, but decentralized gateways process transactions immediately the buyer clicks send.
  • Crypto payments eliminate the need for currency conversions usually made by banks. If your preferred crypto is Bitcoin, everyone pays in bitcoin, no matter where they are.
  • Crypto payments are a one-way street; once it has been sent, it cannot be refunded. This may sound like a con for consumers, but it favors merchants as it discourages consumer fraud.
  • Processing fees are much cheaper than centralized options and do not increase with transactions, resulting in higher profit margins.

7 Popular Crypto Payment Gateways You Can Use Today

Crypto.com

Crypto.com is one of the most popular platforms for crypto-related financial transactions. Their payment gateway charges zero processing fees (according to their website), settlements in your preferred fiat currency, an easy set-up, and a simple dashboard.

Coin Payments

CoinPayments offers the following merchant solutions:

  • Shopping cart plugins
  • Simple & complex website buttons
  • API & IPN
  • A payment request invoice builder
  • Shopping cart buttons
  • Point of Sale interface, and
  • Donation buttons

The gateway supports 62 cryptocurrencies, including the major ones (Bitcoin, Etheruem, Litecoin, Bitcoin Cash), privacy-based coins like PIVX, ZCash, and Monero, and stable coin Tether. Their fees are moderate at 0.5 percent per transaction, and they offer multi-coin wallets and integrations with major e-commerce sites.

A new, exciting feature is the $PayByName feature, where you can use one unique tag to receive payments from all supported coins.

Bitpay

Bitpay offers same-day settlements, easy crypto-to-fiat exchanges, and a list of stable coins to protect from crypto price volatility. Their online payment service allows merchants to create invoices in the form of QR codes in selected cryptos at a locked-in exchange rate.

Buyers scan and pay, and Bitpay converts the crypto to your local currency and deposits it in your bank the next business day, all for a transaction fee of 1 percent.

Bitpay also offers email billing where merchants can create and send invoices via email to their customers; the rest of the process goes the same way as website payments. And finally, the payment gateway company offers an in-store POS interface that allows you to receive crypto through a card swipe.

Coinbase commerce

Coinbase is one of the biggest crypto exchanges globally, but their services extend beyond just exchanging fiat for crypto. They also offer crypto payment services.

With Coinbase, you get a swift set up, typically in minutes, commissionless transactions, an API for your custom backend, and integrations with Shopify and Woo-commerce.

Coingate

Coingate is a simple platform that allows merchants to trade, list, buy, exchange, and accept 50+ cryptocurrencies. Their plugin integrates with major e-commerce platforms like Woo-commerce. Simultaneously, their payment buttons come in three variants: fixed price, slider option, and list type that provide an added layer of payment flexibility.

Currently, they have over 182,000 users, 1M+ processed transactions, and 1M+ merchant orders. They charge a 1 percent merchant fee on transaction and 3 percent trader fees.

Spectrocoin

Spectrocoin’s gateway service allows integration with e-commerce platforms and provides a customizable payment button and an API for custom backends. However, withdrawal fees are quite high at around 5 percent.

GoUrl.io

GoUrl has two major offerings, the website plugins and the online Monetiser. The website plugin supports seamless integration with WordPress and other e-commerce platforms. Simultaneously, the Monetiser allows merchants to sell digital deliverables, i.e., files, pictures, videos, directly from their Dropbox, Google Drive, or other cloud storage account using a link.

To build the payment link, input your private link (the link to your deliverables), select the crypto you want to get paid in, input a public name you want to be shown on the payment page, input the amount and a wallet address, set an expiry date for the URL, and click “create payment link.”

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Born in Bucharest, Marius is the founder of Crypto Adventure. Since his first contact with Bitcoin and cryptocurrencies, he never stopped believing that they are one of the most important innovations of our time, which will forever change the way business is done.