What is Crypto Payment Gateway?

The rise of digital currencies like Bitcoin has encouraged businesses to adapt to the growing trend of Crypto payment gateways. It helps in the easy and secure execution of crypto transactions, offering a modern alternative to traditional payment methods. In this blog, we will be exploring what crypto payment gateways are, their working, their benefits, and what should be considered while choosing the best crypto payment gateways for your business.

What is Crypto Payment Gateway?

Crypto Payment Gateway is a tool that allows businesses to accept payments in cryptocurrencies, like Bitcoin or Ethereum, ditching the traditional method of receiving regular money. It works similarly to traditional payment gateways that process credit card transactions but for digital currencies.

Imagine you own an online store selling furniture for home decor. A customer wants to buy bedroom furniture and pay with Bitcoin. Based on the current conversion rate, the crypto payment gateway shows how much Bitcoin they need to send. The customer sends the Bitcoin from their wallet to the address provided by the payment gateway. You receive the Bitcoin in your wallet. You can either keep it as Bitcoin or convert it to regular money.

Stats: A report titled, ‘Crypto Payment Gateway Market,’ says that the crypto payment gateway market globally was valued at $1 billion in 2021, and is estimated to reach $5.4 billion by 2031, growing at a CAGR of 18.7% from 2022 to 2031.

How Does a Crypto Payment Gateway Work?

The world is eyeing a shift from credit cards to crypto payment gateways as the latter is a more secure, easy, and fast medium of digital payments. Working on crypto payment gateways involves choosing crypto as a payment method, calculating the exact amount, and verifying the transaction. Here’s a simple breakdown of how a Crypto Payment Gateway works:

Choose Crypto as Payment Method: Post filling your shopping cart with your favorite items, move to checkout and select the cryptocurrency payment system option to pay instead of paying regular money.
Payment Amount Calculated: The cryptocurrency payment gateway calculates the amount in cryptocurrency based on the current exchange rate. It defines how much cryptocurrency has to be paid by the customer.
Customer Makes Payment: With the help of a payment gateway for cryptocurrency, the customer transfers the required amount from their crypto wallet to the merchant’s wallet.
Transaction Verification: The transaction is verified on the blockchain, ensuring it is secure and legitimate.
Merchant Receives Funds: Once confirmed, the funds are transferred to the merchant’s crypto wallet or converted to the merchant’s preferred currency.

Stats:As of 2024, we estimated global cryptocurrency ownership rates at an average of 6.8%, with over 560 million cryptocurrencies users worldwide. Source: Triple-A

9 Benefits of Using a Crypto Payment Gateway

A crypto payment gateway offers businesses a modern, efficient, and the most secure way of making transactions. Using a crypto payment gateway offers several benefits for businesses, including global reach, lower transaction fees, faster transactions, and the ability to attract new customers. These gateways also make it easy to convert received cryptocurrencies into local currency and enhance privacy for both the business and its customers.

Below are a few key benefits, with examples, of using Crypto Payment Gateways:

1. Global Reach: Cryptocurrencies are getting popular because of their global reach. It can be anywhere in the world by anyone, without involving any international fees for currency conversion.

Example: A customer in Japan can easily buy from a U.S. store using Bitcoin, without worrying about exchange rates or extra charges.

2. Lower Transaction Fees: Unlike credit card payments, Crypto transactions incur lower fees, saving you a lot of money on every transaction.

Example: If you usually pay 3% per transaction with credit cards, a crypto payment might only cost you 1%, reducing overall expenses.

3. Faster Transactions: Crypto payment platforms ensure much faster cryptocurrency transactions compared to traditional bank transfers.

Example: While a bank transfer might take 2-3 days, a Bitcoin payment can be completed in minutes.

4. Increased Security: Cryptocurrencies are backed by advanced security techniques like two-factor authentication to prevent any incidences of fraud.

Example: Since crypto transactions are recorded on a blockchain, it’s nearly impossible to alter or fake them.

5. No Chargebacks: One of the key benefits of a payment gateway for cryptocurrency is its no reverse policy. Unlike credit card payments, transactions made through crypto gateways cannot be reversed, protecting businesses from fraudulent chargebacks.

Example: Once a customer pays with Bitcoin, they can’t claim a refund through their bank, reducing the risk of chargeback fraud.

6. Attracting New Customers: Customers across the world now seek secure and swift payment methods and crypto payment gateways can be a revolution. By accepting cryptocurrencies, businesses can lure tech-savvy customers who prefer using digital currencies.

Example: A tech enthusiast who owns cryptocurrency might choose your store over others because you accept Bitcoin.

7. Easy Conversion to Local Currency: Many crypto payment gateways offer automatic conversion of received cryptocurrencies into the business’s preferred currency.

Example: You don’t have to worry about handling cryptocurrency on your own. It is quite simple. If a customer pays you in Ethereum, the crypto payment gateway will convert it to USD instantly.

8. Enhanced Privacy: Crypto transactions can be more private than traditional payments, as they don’t require personal information to process.

Example: Unlike credit card payments, customers can pay without sharing their name or address, which is appealing to those who value privacy.

9. Free from Intermediaries: Traditional payment methods require complex bank networks and credit card companies that levy extra fees and compromise security. Cryptocurrency payment gateways allow peer-to-peer transactions, allowing customers to directly shop via their crypto wallets.

Example: When a customer buys jewellery online using traditional payment methods, it goes through banks and intermediaries, taking days and incurring fees. Using a crypto payment gateway, the payment goes directly from the customer’s wallet to the store owner’s, verified on the blockchain, and settled within minutes, cutting out intermediaries and reducing fees.

Stats: The number of users in the cryptocurrency market is projected to reach 328.80 million by 2028, with a user penetration rate of 18.78% in 2024, which is anticipated to rise to 22.20% by 2028 – Source: Forbes

Key Features to Look for in a Crypto Payment Gateway

It is important to do your homework before crypto payment integration in your business. Not all the payment gateways are efficient and secure. To ensure smooth and safe transactions for both businesses and customers, it is important to have features like global support, settlement speed, and real-time exchange. Let us discuss the features of crypto payment gateways in detail:

Security Features: Features such as two-factor verification and end-to-end encryption will make your transaction process secure from attempts of fraud and data breaches.
Transaction Fees: It is important to know about the transaction fees associated with any crypto gateway. All prefer gateways with simple and transparent fee structures.
Support for All Major Cryptocurrencies: Your gateway should support all major and niche cryptocurrencies like Ethereum, Bitcoin, and other popular altcoins.
Integration for Faster Transaction: Check if the payment gateways integrate with your existing systems responsible for making the entire transaction process swift and safe. The best crypto payment gateways will offer compatible plugins or APIs with your e-commerce platform, website and CMS.
Fast Settlement Speed: Regular digital payments made from credit cards take about seven business days in payment settlement. The beauty of using a crypto payment gateway lies in the auto and quick payment settlement process, i.e. within minutes. Look for gateways that enable quick conversion and transfer of funds in your bank account.
Compliance Check: Make sure your payment gateway adheres to regulatory compliance so that legal issues can be avoided. Choose a payment gateway that fulfills all the necessary parameters such as Anti-Money Laundering and Know Your Customer.
Real-time conversions: It is important to convert cryptocurrencies to fiat currencies for managing volatility. Look for features like competitive exchange rates along with automatic conversion options to prevent losses.
Useful Tools: The availability of merchant tools for detailed analytics, invoicing and customizable payment buttons will help enhance your business operations by analyzing customer behaviour, managing transactions, and optimizing overall efficiency.
Support across countries: If your business has a global customer base, then look for a crypto payment gateway that supports international transactions in multiple currencies while complying with international regulations.

Stats: According to a crypto trading firm CREBACO Global, the combined trading volumes of the leading three exchanges—WazirX, CoinDCX, and Zebpay—have exceeded $584 million in Mar. 2024, compared to just $189.91 million recorded at the end of Feb. this year – Source: Forbes

Security Considerations While Choosing A Crypto Payment Gateway

Having a deep sense of security is the fundamental principle of any payment gateway out there in the market. Be it the customers or the business owners, choosing a secure crypto gateway should be paramount. Security considerations while integrating crypto payment options must not be ignored. Here is what to look into!

Encryption: Features like end-to-end encryption make any payment gateway secure and this should be taken care of. It is important to use strong encryption like “AES-256” for data storage and transmission to protect the privacy and sensitive information of customers.
Two-Factor Authentication (2FA): You must implement two-factor authentication irrespective of any user account to create a robust layer of security.
Regular Audits: Conduct frequent security audits at regular intervals along with vulnerability assessments to detect and fix any security loopholes.
Secure APIs: You must also ensure that the given APIs are protected via HTTPS and other robust authentication mechanisms. Also, monitor regularly for suspicious activity.
Cold Storage: Store the majority of funds in offline cold storage to minimize exposure to online threats.
Fraud Detection: Use advanced fraud detection algorithms and monitoring techniques to detect and prevent transactions from fraudulent accounts.
Compliance: Adhere to regulatory standards like AML and KYC to be legally compliant and promote security.
User Education: Inform your users about the best security practices for detecting phishing attempts and also creating strong passwords to prevent such incidents.
Incident Response Plan: Get ready with an incident response plan that will help address and minimize security breach incidents quickly.
Access Controls: Have stringent access controls and adopt the principle of least privilege to define access to sensitive data and systems.

Stats: 39% of consumers believe cryptocurrencies should be used for payments, not just investment. – Demystifying Crypto report

Regulatory Compliance for Crypto Payment Gateway

It becomes paramount that your crypto payment gateway complies with the regulatory bodies. Knowing Your Customer (KYC), and Anti-Money Laundering (AML) are a few regulations that help in the prevention of financial fraud. Let’s take a look at more such compliances in detail:

KYC and AML: Both Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations are meant to eliminate financial crimes such as terror funding, money laundering, corruption, etc. For any payment gateway, it becomes necessary to follow these regulatory compliances.
Licensing: This is another key factor that matters the most when choosing a crypto payment gateway. You should have a mandatory license to use the service in a specific jurisdiction.
Tax Reporting: Keeping tax records of all cryptocurrency transactions is a must. It is to make sure that any applicable taxes are reported to the tax authorities correctly.

Stats: Among the research conducted on 60 countries regarding cryptocurrency, it is legal in 33, banned partially in 17 countries, and is banned completely in 10 countries. However, if we consider the twelve major G20 countries, which account for over 57% of the global GDP, theer cryptocurrency has been legalized completely.

Integration Process of Crypto Payment Gateways

Integrating a crypto payment gateway into your platform can offer your customers a seamless and secure way to pay using cryptocurrencies. This integration process involves several key steps to ensure smooth and efficient transactions while maintaining the highest standards of security.

Step-by-Step Integration Process:

Choose the Right Crypto Payment Gateway: Select a trusted crypto payment gateway that is apt for your business. You must take care of the factors like transaction fees, supported cryptocurrencies, customer support, and security features.
Create an Account: Sign up with your preferred payment gateway provider by giving the required business details at every step of the verification process.
API Integration: Check if your crypto payment gateway is providing any API documentation to support integration. IF yes, then refer to the guidelines in the API documentation to integrate your platform with the API of the gateway. This will help with faster processing of crypto payments, better handling of transactions, and updated payment status.
Configure Payment Options: Configure and customize in terms of the payment options provided on your platform. It is better to accept diverse cryptocurrencies, set the limits for payment, and configure the process of auto currency conversion.
Test the Integration: Now that you are ready to go live, test the integration one last time to ensure that everything is configured properly. You can also run test transactions to check if payments are processed accurately. This way, you can resolve issues promptly.
Go Live: Once the testing phase goes well, bring the crypto payment gateway to your platform. At the same time, you must also inform your customers about the availability of a new payment option on your platform and provide clear guidelines to avail of it.
Monitor and Maintain: It is important to monitor and analyse the performance of the payment gateway on your platform to ensure smooth operation. You must also update the gateway software regularly to identify and fix technical issues.

Stats: Cryptocurrency payments are forecast to grow at a CAGR of nearly 17 percent between 2023 and 2030 – Source: Statista

5 Best Crypto Payment Gateways In 2024

Here is a list of top crypto payment gateways that are currently accepting cryptocurrencies:

1. Coinbase Commerce

Coinbase Commerce accepts multiple cryptocurrencies like Bitcoin and Ethereum. Its user-friendly integration options help businesses easily set up crypto payment platforms.

Coinbase

4.4

Starting Price

Price on Request

Pros

E-commerce platforms such as Shopify and WooCommerce can easily integrate it.
Supports multiple cryptocurrencies.

Cons

Limited to businesses in certain regions.
Delayed customer support.

2. BitPay

BitPay is a cryptocurrency payment processor that enables varied tools and services for online retailers. Apart from accepting Bitcoin and Bitcoin Cash, it also offers several features such as quick settlement options, invoicing, and accounting tools.

BitPay

Starting Price

Price on Request

Pros

Widely recognized and trusted in the crypto community
Offers a range of merchant tools, including invoicing and accounting integration

Cons

Charges a 1% transaction fee, which can add up for small businesses
Limited support for cryptocurrencies beyond Bitcoin and Bitcoin Cash

3. CoinPayments

Supporting over 2000 different cryptocurrencies, Coin Payment Gateway is known for its low transaction fees. As a result, it gets broader acceptance making it a popular choice for businesses looking for cryptocurrency payment processing.

CoinPayments

3.8

Starting Price

Price on Request

Pros

Supports a vast array of cryptocurrencies
Offers low transaction fees, making it cost-effective for businesses

Cons

User interfaces can be complex for beginners
Occasional delays in processing transactions.

4. GoCoin

GoCoin is one of the top crypto payment gateways focused on providing merchant services and supporting multiple altcoins, including Bitcoin, Litecoin, and Dogecoin. It aims to make it easy for businesses to accept cryptocurrencies with minimal hassle.

Pros

Supports multiple altcoins, giving customers more payment options
Focuses on merchant services, offering features like recurring billing

Cons

Not as widely recognized as some other payment gateways
Customer service may not be as responsive as larger competitors

5. Blockonomics

Digital payment gateways incur unwanted fees because of the presence of middlemen. The solution for this is Blockonomics which decentralizes the payment gateway system, allowing businesses to accept Bitcoin directly.

Pros

Decentralized, with no middlemen involved in transactions
Provides a high level of privacy and security for users

Cons

Limited to Bitcoin payments only
Can be challenging to set up for users unfamiliar with crypto technologies

Key Differences Between Crypto Payment Gateways & Normal Digital Payment Gateway

Aspect	Crypto Payment Gateways	Normal Digital Payment Gateways
Currency Type	Cryptocurrencies (e.g., Bitcoin, Ethereum)	Fiat currencies (e.g., USD, EUR)
Transaction Fees	Generally lower, but can vary depending on the network	Often higher and set by payment processors or banks
Processing Time	Can be faster, especially with certain cryptocurrencies	Usually involves some delay, depending on the banks
Global Reach	Borderless, not limited by national boundaries	Can be restricted by regional regulations and banks
Security	High security with cryptographic protection	Secure, but can be susceptible to fraud and chargebacks
Integration	Requires integration with crypto wallets and blockchains	Typically integrates with banks and credit card networks

Future Trends of Crypto Payment Gateways

There has been wider adoption of crypto payment gateways in recent times because of factors like lower transaction fees, decentralized finance and higher security.

Wider Adoption: Businesses today are adopting cryptocurrency as the major mode of transaction. It is used for buying day-to-day items like groceries, apparel and even coffee.
Enhanced Security: Crypto transactions are secured with stronger protection against fraud and hacks, giving buyers and merchants peace of mind.
Integration with Traditional Finance: The exchange between digital money and traditional money is getting easier with the increased conversion between fiat and cryptocurrencies. Even banks and other financial institutions are taking crypto payments seriously and are coming up with new systems to process the exchange between traditional and crypto payments.
Lower Transaction Fees: Sending and accepting cryptocurrency is much cheaper now with payment gateways incurring minimal transaction charges. Thus, it is now more affordable for even small businesses.
Scalability Solutions: Cryptocurrency networks these days can process a large number of transactions in one go without any lag. There are fewer incidences of slowdowns even during the busy times of the day.
Mobile Payment Integration: Mobile payment apps allow people to transact through cryptocurrencies directly from their smartphones. Now, with just a tap on your phone, you can pay in Bitcoin or Altcoin.
Stablecoins and CBDCs: Stablecoins are now being used along with Central Bank Digital Currencies (CBDCs) that ensure transactions while keeping the value stable. These cryptocurrencies help maintain a stable value consistently for transparent purchases and savings.
Decentralized Finance (DeFi): Decentralized finance has streamlined activities like borrowing, lending, and earning interest without the interference of any traditional bank. Thus, ensuring financial independence.

Conclusion

In many countries, crypto trading and payments through cryptocurrency are legalized now. Cryptocurrency payment is getting more popular day by day because of lower transaction fees, faster transactions and higher security. It is undoubtedly a cost-effective option for safe and reliable global transactions.