As blockchain technology continues to witness significant adoption, several businesses in various sectors, including hospitality, academics, and healthcare, are now open to accepting crypto payments. This has been made possible by the multiple crypto payment gateways in the market.
Today, a merchant does not need to own a crypto wallet in order to start accepting payments in digital currencies since these payment gateways offer a simple solution for anyone to adopt crypto in their businesses.
By now, you must be wondering what crypto payment gateways are. If you stick with us through this article, you will clearly understand their role in the crypto industry and learn their pros and cons. Please keep reading.
What’s a Crypto Payment Gateway?
A crypto payment gateway receives crypto payments on behalf of merchants and then transfers traditional money to their bank accounts. This means businesses can support crypto payments without having to deal with digital assets themselves. However, companies that do not mind being fully exposed to crypto can receive payments in digital currencies using their wallets and then convert them to fiat on centralized exchanges.
But crypto payment gateways simplify that process. In addition, they complete transactions almost instantly. These gateways come in two types: non-custodial and custodial. A custodial crypto payment gateway requires merchants to open an account on the platform so that the fiat currencies can be deposited there. Once the funds reflect in that account, they can then withdraw to a bank account. On the other hand, a non-custodial gateway processes crypto payments and sends fiat currencies directly to the merchant’s bank account.
It is worth highlighting that most crypto payment gateways only deal with Euro and United States Dollars. Therefore, ensure you have a bank account that allows deposits in any of these two popular currencies before using a crypto payment gateway.
How a Crypto Payment Gateway Works
Firms looking to support crypto payments but are not yet ready to fully step into this nascent industry can use crypto payment gateways. These platforms charge processing fees but are considerably low.
Here is how a typical crypto payment gateway works:
Step 1: A customer shops on a merchant’s ecommerce website and then selects “pay with crypto” as their preffered checkout method. After that, they are directed to a crypto payment gateway.
Step 2: On the gateway page, the customer is asked to connect their wallet and pick the supported cryptocurrencies to initiate payment.
Step 3: After entering the right amount of tokens required to complete the transaction, the payment gateway immediately converts them into a fiat currency and deposits the funds into the merchant’s account.
Pros and Cons of Crypto Payment Gateways
Pros
One major advantage that crypto payment gateways offer is instant settlements at a relatively low fee. In addition, they do not involve multiple middlemen to complete a transaction, thus providing a good customer experience. Another advantage is that most crypto payment gateways support a wide range of cryptocurrencies, so there is a chance you can pay for products using your favorite digital currency.
Cons
Crypto payments via gateways do not happen in a decentralized manner, so that means if these platforms encounter technical issues, they could delay payments. The second disadvantage is that making payments through a crypto payment gateway is more costly due to the additional processing fee than paying the merchant directly.
Do Coinbase and Binance Have Payment Gateways?
Two of the most popular exchanges, Coinbase and Binance, have their own crypto payment gateways known as Coinbase Commerce and Binance Pay, respectively.
Coinbase Commerce allows people to make payments in ten cryptocurrencies, including, Dogecoin, Bitcoin, ApeCoin, Shiba Inu, Tether, Bitcoin Cash, Dai, Litecoin, Ethereum and USDC. Payments are then converted to United States Dollars. Note that a 1% processing fee is incurred.
On the other hand, Binance Pay is designed for crypto-friendly businesses. This payment gateway can be integrated into online and physical stores.
Conclusion
Before using a crypto payment gateway, confirm if it has proper security measures in place to protect your crypto. Also, check if the platform has a customer support team to which you can seek help in case you face challenges.
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