Reportedly, the newly unveiled CryptoCurrency Payment option is available to more than 5,000 point-of-sale (POS) terminals and Green Finance online payment gateway.
What Is a Cryptocurrency Payment Gateway?
A cryptocurrency payment gateway is a payment processor for digital currencies, similar to the payment processors, gateways, and acquiring bank credit cards use. Cryptocurrency gateways enable you to accept digital payments and recieve fiat currency immediately in exchange.
These companies remove any uncertainties or reservations you might have with cryptocurrency and allow you to offer more payment options.
It’s important to note that digital currency payment gateways are not required. It’s perfectly acceptable to use your personal wallet to accept cryptocurrency payments; however, gateways take the extra work of exchanging cryptcurrency and managing a wallet out of your hands.
- Cryptocurrency is beginning to be accepted as payment at many merchants.
- Cryptocurrency payment gateways act as transaction facilitators between merchants and customers for processing payments.
- If you don’t understand or trust cryptocurrency, payment gateways give you the ability to accept them as payment and receive fiat currency in exchange.
How Does a Cryptocurrency Payment Gateway Work?
Payment gateways are companies taking on the perceived risk of cryptocurrency payments by using their wallet(s) to facilitate transactions between merchants and their customers.
In terms of steps, the following workflow gets executed:
- Your customer opts to make payment in cryptocurrency at checkout (in-store, on the web, or in-app).
- They pay you an amount equal to the digital currency’s fair market value at the time of the transaction.
- The cryptocurrency payment service instantly converts the payment into the currency you choose.
- The money is added to your account with the provider; it is deposited to your designated bank account in intervals decided on in your service contract.
The process is transparent to you because you don’t have to worry about cryptocurrencies; only that your cryptocurrency service provider will place the appropriate funds in your account.
Be sure to check your country’s cryptocurrency regulations before setting up an account with a gateway. These gateways can operate from anywhere in the world, and many countries are developing new laws regarding digital currency use.
The provider uses a cryptocurrency wallet to facilitate the transfers. If that currency is designed with a payment system, the provider will incur fees charged by the currency network’s transaction validators.
Transaction validators verify blocks and transactions in the blockchain—in exchange for their energy use and computional power, they are paid in small increments in the cryptocurrency transaction they validated.
The providers pass on these fees to you, and charge their service fees so that they can continue operating and offering their services.
Advantages and Disadvantages of Payment Gateways
By nature, cryptocurrency is designed to be decentralized and anonymous. The system makes it easy for two parties to make an exchange. However, some merchants might not be comfortable accepting payment in digital currency; they might not understand how any of it works or be skeptical about the system.
For these reasons, it’s important to know the advantages and disadvantages of payment gateways so that you can decide how you want to accept digital currency payments.
- A payment gateway removes the anonymity of who you’re dealing with while maintaining your customer’s preference for it.
- You have someone to contact if there are payment issues.
- You can accept payments from anywhere in the world, in any cryptocurrency your provider will take.
- You receive the funds in the account with your provider, who transfers them to you.
- You don’t have to worry about or attempt to understand cryptocurrency.
- Reduces volatility risk—the risk of losing value waiting for a transaction to be verified by the cryptocurrency’s network—by paying you the market rate for the tokens at the time the transaction was conducted.
- A payment gateway is a third party, which cryptocurrencies were originally designed to bypass.
- You have to rely on the provider’s ability to maintain uninterrupted services because you might be receiving payments from around the world and in different time zones.
- Gateways are companies providing a service, so they will market themselves in a fashion that makes it seem like you need their services when realistically you don’t.
- You pay small transaction fees when you use your cryptocurrency wallet; you pay more when you use a cryptocurrency payment gateway.
- If the payment gateway is hacked, you’ll lose any funds you have in your account with the provider while you’re waiting for them to be transferred.
It isn’t necessary to have an account with an institution, exchange, company, or other entity to acquire a cryptocurrency.
However, it is one of the easier and safer ways to get your hands on some cryptocurrency unless you’re familiar with setting up a wallet and sending or receiving crypto.