Why And How To Collect Crypto Payments On Your Website?
Cryptocurrency payments are an increasingly popular way to make and accept payments. In fact, according to a recent survey by Deloitte, nearly 75% of retailers plan to accept either cryptocurrency or stablecoin payments within the next two years. With cryptocurrency, you can transfer money quickly, securely, and often at a much lower cost than traditional methods. This makes cryptocurrency payments a convenient and cost-effective option for businesses looking to expand their payment options. In this article, we’ll take a look at what cryptocurrency payments are and what merchants need to consider when collecting them on their websites.
- What Is Cryptocurrency Payments
- Benefits and Drawbacks of Using Crypto Payments
- How to Accept Crypto Payments
- What to Look for in a Crypto Payment Gateway
- How Do Crypto Payment Gateways Work?
What Are Cryptocurrency Payments
Cryptocurrency payments involve the use of digital currencies, such as Bitcoin and Ethereum, which can be exchanged online for goods and services. These currencies are decentralized and not controlled by any one entity. Instead, cryptocurrency transactions are secured using blockchain technology and verified by a network of computers. This ensures that cryptocurrency payments are secure and private, making them an attractive option for businesses looking to accept digital payments. Cryptocurrency payments are often fast, secure, and cost-effective for both the sender and receiver of funds.
Benefits of Cryptocurrency Payments
Cryptocurrency payments offer a number of advantages over traditional payment methods. Some of the most common ones include:
- Security: Cryptocurrency payments are secure and private, making them a great option for businesses to accept digital payments with peace of mind. One of the principal benefits of cryptocurrency in this regard is that payments are final and irreversible unless a refund is issued by the merchant. This eliminates the risk of chargebacks and payment reversals and keeps payment oversight with merchants.
- Speed: Compared with credit card payments, crypto payments have faster settlement cycles. Usually, it takes up to one day, compared to three-five business days when using traditional payment methods like a bank transfer or credit card.
- Cost: Compared to traditional credit and debit card processing fees, cryptocurrency payment fees could be less-expensive. With blockchain technology, eCommerce crypto payment solutions can reduce these fees below 3%, including being as low as 0%, per transaction.
- International Use: cryptocurrency payments are borderless, meaning that businesses can receive payments from anywhere in the world. This saves from worrying about exchange rates and extra charges when converting into the local fiat currency.
- Transparency: cryptocurrency payments are publicly verifiable on the blockchain, meaning that all parties involved in a transaction can view its status and progress.
- New customer segments: Crypto payment solutions are not a replacement for traditional methods- merchants can have both! This gives merchants more options and the opportunity to access new customer segments, including the younger generation who often use crypto coins as their currency.
Despite the many advantages of cryptocurrency payments, there are also some drawbacks. For example, cryptocurrency is highly volatile; its value can fluctuate significantly which makes it a risky option for businesses. To eliminate the risk, some crypto payment services provide guarantees, which lock in the price at the time of purchase and settle the transaction at that rate. That means merchants will be paid in full despite any potential short-term fluctuations.
How to Accept Crypto Payments
One way to accept cryptocurrency payments is to do it manually via a cryptocurrency wallet. A cryptocurrency wallet is an online tool that allows users to store, receive and send cryptocurrency funds. Wallets also provide merchants with the ability to accept cryptocurrency payments from customers in exchange for goods or services. Done manually, it involves the user sending the funds from their wallet to the recipient’s/ merchant's public address. Even though this task might sound easy, it can be difficult and overwhelming for those who are new to the process. It’s not rare for users to make irreversible mistakes, such as sending the wrong kind of crypto to a certain address or selecting the wrong blockchain network. As there is no way to return a crypto transaction, these often lead to significant losses.
The alternative way is via a crypto payment gateway. According to Deloitte, just over 50% of retailers plan to have third-party payment processors convert digital currency into fiat. Cryptocurrency payment gateways are similar to regular payment gateways, but for digital currencies. A crypto payment service provider acts as an intermediary between the payer and the receiver for processing the crypto payments, allowing merchants to accept payments in cryptocurrencies both online and at physical locations. The service provider takes care of the complex backend workflow of crypto payments and offers buyers and sellers a seamless payment service. Some payment providers even support both traditional and alternative payment methods, such as cryptocurrency, meaning merchants can have a fast integration of various payment options at once.
Some of the advantages of using a crypto payment gateway:
- A crypto payments gateway is, for many newcomers, simpler to use than setting up and managing a wallet themselves.
- There is no need to understand cryptocurrency and blockchain technology, as all are managed by the provider.
- They offer customer service, so if there are any issues with payments, there is always someone available to help.
- Merchants receive the funds in the account with the provider, who transfers them.
- Reduces volatility risk—crypto payment providers often eliminate this risk by paying merchants the market rate for the tokens at the time the transaction was conducted.
What to Look for in a Crypto Payment gateway
When choosing a cryptocurrency payment gateway and processor, it’s important to consider a few factors:
- Look for a platform that supports multiple cryptocurrencies; this will give customers more payment options and make accepting cryptocurrency payments easier.
- Check whether the cryptocurrency payment gateway is secure and user-friendly; this will ensure that cryptocurrency payments can be processed quickly and securely.
- Make sure cryptocurrency payment gateway fees are reasonable; this will help reduce the costs associated with cryptocurrency payments.
- Look for a cryptocurrency payment gateway that offers a guarantee against cryptocurrency volatility.
- Look for cryptocurrency payment gateways and processors that offer customer support services; this will ensure that any queries or issues can be addressed quickly and effectively.
How Do Crypto Payment Gateways Work?
When a user pays for something using cryptocurrency, the payment processor immediately converts the digital currency into regular, fiat money (i.e. government-issued currency), based on that particular crypto's market value at the time of purchase. The designated amount of fiat money is then transferred to the merchant's account. Afterward, the money can be sent to a specified bank account. With this easy system, every merchant can provide crypto payment options to its customers without managing digital currencies.
Overall, cryptocurrency payments offer a convenient and secure way to accept payments online. Although merchants can do it by themselves creating and using their crypto wallets, with the right cryptocurrency payment gateway and processor, they can provide customers with a safe and reliable way to pay with cryptocurrency on your website. Plus, cryptocurrency transactions are often cheaper than traditional payment methods, so businesses can save money while expanding their payment options.
CatalystPay partners with RocketFuel in providing easy and secure crypto payments in addition to other available traditional and alternative payment methods. Contact us to discuss how we can elevate your business by enabling crypto payments.