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As the world progresses towards digitization, the modes of payment keep evolving with each passing year – from physical modes to digital money and now cryptocurrency. Today millions of people own cryptocurrencies, and reciprocally, thousands of e-commerce merchants and websites have started accepting cryptocurrency as a mode of payment. The first physical Bitcoin transaction was two pizzas in exchange for 10,000 BTC! While we have come a long way from that era, cryptocurrency payments posit some uncertainties and reservations for customers who are still getting used to digital asset payments.
Cryptocurrencies help overcome the limitations faced by traditional payment systems like lack of automation, delayed cross-border transactions, and third-party involvement. Businesses worldwide understand the hitches in the traditional payment systems and seek to embrace crypto payments, allowing more payment options to customers.
But cryptocurrency payments are a bit more complex than traditional fiat payments, as transferring cryptocurrencies from one wallet to another requires some understanding and know-how of operating wallets and public-private keys and a certain level of caution. To smoothen out these issues, e-commerce merchants and websites use cryptocurrency payment gateways, just like regular payment gateways, enabling digital payments and instantly receiving fiat currency in exchange. Let’s discuss.
What is a crypto payment gateway?
Investopedia defines a cryptocurrency payment gateway as ‘a transaction facilitator between merchants and customers for processing payments.’ It is a dynamic payment processing platform that allows organizations and businesses to accept payments in cryptocurrencies without any security hazards.
It supports direct payments from crypto wallets for users. These payment gateways responsibly transfer customers’ payment-related wallet details to the merchant’s software. With increasing businesses looking for good, instant, and safer payment gateways, crypto payment gateways have become the obvious choice.
Here are the workflow steps involved in a cryptocurrency payment gateway:
- The customer chooses to make cryptocurrency payments at checkout – in-app, in-store, or on the web.
- The customer pays the merchant or website an amount equal to the cryptocurrency’s market value at the transaction time.
- The cryptocurrency payment gateway converts this amount into the currency the e-commerce merchant/firm chooses.
- The money is instantly added to the merchant’s account with the provider and, at regular intervals, is transferred to the designated bank account mentioned in the service contract of the merchant/firm.
Main features of crypto payment gateways
As the trend of crypto payment gateways escalates, the number of crypto payment gateways are also increasing. Certain salient features differentiate the best crypto payment gateways from the rest. Given below are some must-have features:
Peer-to-peer Transactions
E-commerce vendors, merchants, retailers, and businesses can receive payments directly from the customers over a peer-to-peer system by deploying a decentralized payment gateway into their existing payment module. This feature brings two benefits- speed in transactions and a secure environment over the payment gateway.
Cross-border transactions
Usually, a fiat currency transaction takes up to 5 to 15 days, while crypto-based transactions take just a few minutes to complete the process. The fast speed helps businesses for quicker national or international imports and exports via seamless cross-border transactions.
No intermediaries
The crypto payment gateways eliminate the role of third parties in transaction processing. So, the payments directly reach the customer to the merchant at lower transaction costs.
Compatible with operating systems
The crypto payment gateways are fully compatible with different operating systems like- Windows, macOS, Linux, etc. Therefore, merchants do not need to configure their device or the application to integrate the payment gateway.
Easier auto settlement procedure
Crypto payment gateways offer an auto settlement option through which one can easily connect payment gateway to exchanges to instantly convert cryptocurrencies into fiat currencies or stablecoins.
Simple integration
Cryptocurrency payment gateways are simple to integrate into any existing application. Therefore, merchants and vendors can easily plug in a crypto gateway to their application and start accepting payments in crypto.
Benefits of Crypto Payment Gateways
Confidentiality
Unlike the traditional payment gateways, decentralized crypto payment gateways neither ask for registration or any KYC (Know Your Customer) details for verification purposes. The platform allows users to join the network anonymously. This anonymity feature is essential for merchants to safeguard user privacy.
No chargebacks
The system does not allow chargebacks or refunds as the payment gets processed from a crypto payment gateway. This feature allows enterprises with higher-risk businesses to use these payment gateways.
Instantaneous processing
Crypto payment processing usually takes less than 10 seconds, and with no intermediary involvement, the processing is really fast and allows merchants and vendors to accept crypto payments easily and quickly. Crypto payment gateways also allow users to exchange crypto for fiat money quickly.
Disadvantages of Crypto payment gateways
Despite all their advantages, these payment gateways are essentially third-party players. Cryptocurrencies were originally designed to bypass these middlemen, and using them defeats the very purpose of cryptocurrencies. Being third-party gateways, the performance of these crypto payment gateways is dependent on the provider’s ability to allow uninterrupted services from across the globe. Crypto payment gateways add an additional layer to the fee structure beyond wallet fees. If ever a payment gateway is hacked, the merchant may lose all their funds.
It should be said here that cryptocurrency payment gateways aren’t necessary, and it is perfectly fine if you want to use your personal crypto-wallet to accept crypto payments. These crypto payment gateways reduce the extra steps of exchanging cryptocurrencies and manage your wallet on your behalf.
There are plenty of such crypto payment gateways, such as Coingate, BitPay, Shopify Gateway, SpicePay, etc., which, when picked with proper knowledge, can help users in multiple ways possible.
Frequently Asked Questions
How Safe Are Cryptocurrencies?
Cryptocurrencies can be safe, but your crypto wallets can be hacked if proper security steps are not performed. There are also dangers and uncertainties associated with investments, and we cannot declare any virtual currency investment risk-free. Buying and selling cryptocurrencies does not have to be dangerous if the trader is well-versed in the market and treats his coins with care.
Is Crypto Legal In India?
Cryptocurrencies are legal in India, and anyone can purchase, sell, and exchange them. It is currently uncontrolled, as India lacks a regulatory structure to oversee its operations. Per the Ministry of Corporate Affairs, companies must now record their crypto trading/investments within the financial year. In cases where a person receiving the gains is an Indian tax resident, or the cryptocurrency is regarded as domiciled in India, cryptocurrency transactions have been taxable in India
Is Cryptocurrency Banned In India?
No, cryptocurrency is not banned in India. India has seen its ups and downs in the crypto sector concerning its legal status. The Reserve Bank of India (RBI) issued a circular in April 2018 advising all organizations under its jurisdiction not to trade in virtual currencies or provide services to assist anyone in dealing with or settling them. A government committee proposed outlawing all private cryptocurrencies in mid-2019, with up to ten years in prison and severe penalties for anyone dealing in digital currency. The Supreme Court overruled the RBI's circular in March 2020, allowing banks to undertake cryptocurrency transactions from dealers and exchanges.
Is Pi Cryptocurrency Safe?
Pi Network captured the crypto community’s interest even before it officially debuted. Its innovative mobile mining approach and user-friendly design simplify crypto adoption for a broader audience. Some users see this as a chance to get engaged in the crypto from the beginning and profit in the future, similar to how early Bitcoin adopters made huge profits by mining and keeping the coin. Other users have compared Pi to a worthless multi-level marketing (MLM) scheme.
What Is Cryptocurrency?
A cryptocurrency is a digital currency secured by encryption, due to which chances of activities such as counterfeiting and double-spending taking place get close to impossible. Cryptocurrencies get created on blockchain technology ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are unique in that they do not get issued by any central authority. The term "cryptocurrency" comes from the encryption techniques used to keep digital currencies and the network safe.
Is crypto legal?
Crypto is legal in most countries, including India. While nations like the U.S. and many in Europe have regulatory frameworks, others like China have strict bans.
Is Mining Cryptocurrency Legal?
Cryptocurrency mining can be time-consuming, expensive, and sporadically profitable. Mining has an appeal for many cryptocurrency enthusiasts as miners are paid directly with crypto tokens for their efforts. The legality of cryptocurrency mining is dependent on where you live. In India, there is no restriction on crypto mining.
What Is The Safest Cryptocurrency To Invest In?
Bitcoin has had the highest market capitalization, has been around the longest, has the most experienced development team, and has enormous network impact and brand recognition. As a result, while trading cryptocurrencies, the rate of return on Bitcoin is commonly used as a benchmark. However, the risks associated with cryptocurrencies remain, and the safest cryptocurrency for you depends on your analysis.
How To Invest In Cryptocurrency Stocks?
Cryptocurrency can be purchased in two ways: through mining or exchanges. The process of confirming and adding transactions to the blockchain public ledger is known as cryptocurrency mining. Cryptocurrency exchanges are another option. Exchanges make money by charging transaction fees, but there are alternative platforms where you may communicate directly with other cryptocurrency traders.
How To Invest In Cryptocurrency In India?
There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is the process of verifying and adding transactions between users to the blockchain public ledger. Purchasing cryptocurrency in India is a straightforward procedure where investors simply participate by registering with a crypto exchange such as WazirX. After registering for an account, citizens can trade multiple cryptocurrencies, store cryptocurrency in wallets, and more.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
