With the rise in consumer usage of cryptocurrency, you have probably heard or seen the phrase “cryptocurrency payment gateway” floating around in the news and articles. So, what is crypto payment gateway, how does it work, and should business owners consider integrating a gateway into their workflow? Let’s dive deep into the topic of “What is crypto payment gateway?” with XAIGATE today in this article.
What is crypto payment gateway?
Firstly, so what is crypto payment gateway? Cryptocurrency, different from traditionally used fiat currencies such as USD, is a digital form of currency. Therefore, to assist merchants in seamlessly accepting cryptocurrency as their payment method, a cryptocurrency payment gateway acts as a bridge between business owners and customers who are paying for goods and services with crypto.
In other words, a cryptocurrency payment gateway is a payment processor for digital currencies. It is the equivalent of other similar fiat currencies payment gateways and acquiring bank credit cards use. Cryptocurrency payment gateways allow merchants to accept crypto from their customers and receive these payments in the form of either crypto or fiat currencies.
Learn more about integrating a crypto payment gateway into websites: Best 4 Cryptocurrency Payment Gateway for Website
How does a crypto payment gateway work?
We’ve learned what is crypto payment gateway in the section above. So, how does a crypto payment gateway work in order to accept cryptocurrencies from customers on behalf of store owners or businesses?
Payment and currency settlement flow
Different crypto currency payment gateways may have unique features that set them apart from other competitors on the market. However, most gateways follow a similar standard payment and currency settlement flow:
- Customers choose to pay crypto at checkout: When using services or purchasing goods from a website, on an app, or in a store, customers choose to pay in cryptocurrencies at the market rate at the time of the transaction.
- Crypto payment gateway verifies the payment: The crypto payment gateway service provider accepts crypto payments from customers and verifies that the customers have paid the correct amount of cryptocurrencies.
- Crypto payment gateway processes the payment: The gateway service processes the payment and converts in into another type of crypto or into fiat currencies, depending on the merchant’s choice.
- Funds are deposited in merchant’s account: The gateway service deposits funds into the merchant’s bank account or crypto wallet depending on the type of currency he/she chooses to receive.
Fees
After diving into what is crypto payment gateway and how it works, we have demonstrated that it is undoubtedly a crucial service that can help facilitate a business in accepting cryptocurrencies and expanding their customer outreach globally. Knowing what is crypto payment gateway and how it is a service provider, there are going to be fees associated with using it in order for service providers to maintain their business and keep providing well-maintained and secured gateway.
The crypto payment gateway accepts the perceived risks of cryptocurrencies on behalf of merchants when accepting crypto payments from customers and uses a crypto wallet to facilitate transactions. 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 to make sure they are legit and safe. And, in exchange for their energy use and computational power, the crypto gateway pays them in small increments every transaction they validate. These fees are passed onto merchants by the gateway providers.
All in all, the final fee incurred by crypto payment gateway provider includes the transaction validators’ fees as well as the gateway service’s fees so they can continue operating as a business and offering their services to merchants around the globe.
Types of crypto currency payment gateway
There are two types of crypto currency payment gateway:
- Custodial crypto payment gateways: With these types of gateways, the profit made by merchants are placed into their accounts, at which point they can start withdrawing funds to their wallets.
- Noncustodial crypto payment gateways: These types of gateways process the crypto payment and transfer the profit directly to the merchants’ accounts.
In other words, noncustodial crypto payment gateways, different from custodial ones, do not touch merchants’ crypto at any point in the transaction but simply process it. And, the merchants, in the case of noncustodial gateways, hold the keys to their own wallets and can access their funds at any point.
Pros and cons of using a cryptocurrency payment gateway
Having learned about what is crypto payment gateway and its functions, before going into pros and cons of using one, it is important to note that crypto payment gateways are not required to accept crypto as a payment method. Merchants can accept crypto into their personal wallet perfectly fine. However, this method incurs certain risks and requires a lot of extra work of exchanging cryptocurrency and managing the wallet on their own. Below, we will go into the pros and cons of a gateway so you can better understand the article’s focus of “What is crypto payment gateway?”
Pros
- Reduced volatility risks: Cryptocurrencies have perceived volatility risks since they are digital forms of currencies. Therefore, using a crypto payment gateway that pays you at market value when the transaction occurs takes out the risk of crypto changing its value while waiting for the transactions to clear and settle.
- Simplified transactions: A crypto payment gateway enables you, as merchants, to seamless integrate the crypto payment option into your ecommerce or business websites as well as your customers to pay in crypto in a seamless and convenient manner. A gateway takes away the stress of managing, verifying, and converting crypto on your own.
- No necessity of understanding how crypto ecosystem works: Because of what is crypto payment gateway, it helps merchants process cryptos even when they don’t necessarily have much expert knowledge on crypto and crypto ecosystem.
- Global acceptance: Crypto payment gateway allows merchants to reach global customer pool by accepting a wide range of cryptocurrencies and from people all around the world.
Learn more about XAIGATE as a global crypto payment gateway: The Ultimate Crypto Payment Gateway for Global Sales
- Support to deal with issues: Most crypto payment gateways have a customer service team to help store owners should problems arise during the integration as well as operation of accepting crypto down the line.
Cons
- Commission fees: As discussed above, because of the nature of what is crypto payment gateway, there are commission fees associated with using these services.
- Reliance on the Provider: You, as the merchants, depend on the gateway provider to maintain consistent service so you can operate your business smoothly and without disruption. So, it is important to select for the best provider when deciding which one you want to integrate into your workflow.
- Security Risks: As with any payment gateway, a crypto payment gateway could be hacked and you run the risks of losing your funds that are waiting to be processed should this situation arises.
Learn more about selecting the best gateway service: 5 TOP Cryptocurrency Payment Gateway for Business
XAIGATE – a leading crypto payment gateway for global sales
So, if you have made it this far in the article, you would have background knowledge on what is crypto payment gateway and how it works. There are many gateways on the market nowadays, and each has their own unique features. If you are looking to integrate a gateway into your business, XAIGATE is the ideal choice if you want a reliable, safe, and efficient gateway at an affordable cost so you can advance your business without increasing the overhead cost too much.
XAIGATE is a secure and user-friendly cryptocurrency payment gateway for business that allows businesses to accept crypto payments from customers around the world. XAIGATE is ideal for customers who want to easily integrate crypto payments into their websites and ecommerce stores. XAIGATE is also one of the best gateways for merchants who want to approach the international communities. Some of XAIGATE outstanding features include:
- Low processing fees
- No monthly maintenance cost
- Easy setup: User-friendly UX/UI
- Invoice services: XAIGATE assist clients with requesting payments and processing them through our blockchain API.
- Global payments: We accept crypto payments from all over the world.
If you choose us as your service provider, XAIGATE will be happy to assist you every step of the way! With our professional team of experts, you can rest assured our crypto payment gateway will be seamlessly and securely integrated into your business workflow.
