What is crypto payment gateway and how does it work?
Crypto for Advanced
A cryptocurrency payment gateway is a digital currency payment processor, similar to how payment processors, gateways, and acquiring bank credit cards work. Cryptocurrency gateways allow you to accept digital payments and instantly get fiat cash in exchange. These firms eliminate any doubts or worries you may have about cryptocurrencies and enable you to provide more payment choices. It should be noted that digital currency payment channels are not necessary. It is completely fine to accept bitcoin payments using your personal wallet; however, gateways remove the added burden of converting cryptocurrency and managing a wallet from your hands.
Payment gateways are businesses that take on the perceived risk of cryptocurrency payments by facilitating transactions between merchants and their consumers through their wallets. Payment gets executed in the next steps:
- At the checkout, your consumer chooses to pay in cryptocurrencies (in-store, on the web, or in-app).
- They pay you the fair market value of the digital currency at the moment of the transaction.
- The cryptocurrency payment service translates your money into the currency of your choice in real time.
- The money is added to your provider's account and put into your chosen bank account at the intervals specified in your service contract.
To facilitate the transfers, the service employs a bitcoin wallet. If such currency is built with a payment mechanism, the supplier will be charged transaction validator costs by the currency network. Transaction validators validate blocks and transactions on the blockchain in exchange for being paid in tiny increments of the cryptocurrency transaction they verified in exchange for their energy usage and computational capacity. These fees are passed on to you by the providers, who charge their service fees in order to continue functioning and providing their services.
Because cryptocurrency is made as decentralized and anonymous, it is important to know the disadvantages and advantages of mentioned payment type.
For disadvantages we can count:
- A payment gateway is a third party that cryptocurrencies were supposed to avoid
- When you use your bitcoin wallet, you pay tiny transaction costs; when you use a cryptocurrency payment gateway, you pay more
- If the payment gateway is compromised, you will lose any money in your provider's account while you wait for them to be transferred
Advantages of such payment gateway are:
- A payment gateway removes the secrecy of who you're working with while preserving your customers' desire for it
- If there are any payment concerns, you have someone to contact.
- Reduces volatility risk by paying you the market rate for the tokens at the moment of the transaction