If you're a merchant, accepting cryptocurrency payments is a great way to attract new customers. It also gives you the opportunity to be at the cutting edge of technology and innovation. You can take advantage of the lower transaction fees and faster settlement times that come with accepting cryptocurrencies.
You’ve probably heard the buzz about cryptocurrency payments. You may have even considered accepting them yourself, but you’re not sure where to start.
Cryptocurrencies are a growing market with a lot of potential for businesses. By accepting crypto payments, you can diversify your business and reach new customers who prefer digital transactions. Cryptocurrency payments are easy to use and provide fast and secure payment processing through blockchain technology—a digital ledger that records transactions across computers on a peer-to-peer network.
The first thing to consider when accepting cryptocurrency payments is whether you will be using a non-custodial or custodial wallet. A non-custodial wallet, also called a “hot” or “online” wallet, is an application on your phone or computer that allows you to store and send cryptocurrencies. These wallets are often free to use and allow direct access to your funds.
Custodial wallets are typically provided by the company that hosts your website or app. A custodial wallet means the company holds your private keys in a protected environment with strict security measures in place (typically referred to as hardware security modules).
This can provide extra protection for businesses who operate online stores, but it comes at the cost of convenience and control over who has access to their funds at any given moment because they aren't responsible for backing up their own private keys outside of what their host offers them through their website/app platform.
Non-custodial wallets are cryptocurrency wallets with all the private keys controlled by the user but this comes at the cost of convenience and functionality that a custodial wallet run by a payment gateway can provide.
The next consideration is how will payment processing work from start-to-finish? Will customers need an invoice before placing orders? If so, where does this information go once the order has been processed? How do we communicate about issues such as refunds and cancellations if there isn't an easy way for us both parties identify each other digitally?
Additionally: Do we have systems set up so that when money transfers between yours accounts will generate notifications allowing us all keep track of where everything stands financially so everyone knows exactly where they stand at any point during every day's activities?
Most cryptocurrency payment gateways can handle all of these intricacies with cryptocurrency payments particularly around payment confirmation notification and invoicing.
There are some potential risks to consider when accepting cryptocurrency payments
The exchange rate between fiat and crypto can fluctuate wildly at any time, which means accepting digital currency could put your business at risk of losing money on every transaction. This can be avoided by immediately off-ramping or converting the sell amount into a stablecoin or fiat currency.
Cryptocurrency payments are final and non-reversable and can be subject to fraud. New on-chain analytics tools have been created to help vendor flag wallet address and transactions for possible fraud and money laundering.
Private key security is a top priority for accepting cryptocurrency transactions. If someone steals another person’s private key then it allows them complete control over that person’s assets without needing permission first. Many cryptocurrency payment gateways using mutiple layers of security including multi-signature wallets to protect user assets.
Once the business has decided to accept cryptocurrency, they need to determine if they want to use a payment gateway or not. There are pros and cons of using a payment gateway.
A cryptocurrency payment gateway offers:
- Security and fraud prevention through digital signatures
- Customer support services (chatbots, 24/7 phone line support)
- Integration with your current business systems such as ERP/CRM solutions
- Can accept fiat currency as well in addition to accepting crypto payments
When choosing a cryptocurrency payment gateway, it's important to consider the following criteria:
If you're planning on accepting bitcoin, ether, or other major cryptocurrencies as payment, you'll want to make sure that your payment gateway offers support for these currencies. Alternatively, if you plan on accepting only fiat currencies (such as USD or EUR), make sure your preferred blockchain wallet is able to convert cryptocurrencies into a fiat currency of your choice before they reach your bank account—this way customers will be able to use their cryptos in real time without waiting for them get converted into a digital token first.
Cryptocurrency transactions can be expensive due to high network fees associated with them; however there are some providers out there who offer lower rates than others by incorporating off-chain transactions which bypass blockchain congestion but do require more complicated integrations with merchants' existing systems and toolsets. You should also look at how much each service charges per month in maintenance costs (if any).
The best option would be one where all its functionalities are easily accessible through an online interface so there's no need for special apps or plugins just yet until they become mainstream everywhere else too!
If you're considering accepting cryptocurrency payments, there are a lot of reasons why it can be helpful for your business. But there's also a lot to consider before jumping in. We hope this post has given you some ideas about what those considerations are, and how to go about making sure that accepting cryptocurrency payments is a good decision for your business.
To learn more about our cryptocurrency payment gateway, check out our checkout feature.
Updated 10 months ago