Cryptocurrency continues to grow in popularity. Consumer demand has grown with it, and major businesses such as Burger King, Subway, and Norwegian Air now provide customers with crypto payments or token rewards programs. Even Visa and Mastercard have pivoted and now provide business-to-consumer payment options.
The Global Crypto Adoption Index tracked an 880% increase in 2021 as businesses add digital tokens as a payment option at record numbers. But the entire decentralized finance industry is an unregulated payment space, which can bring up plenty of questions. There is price volatility to worry about, potential fraud, and new setup structures for digital coin transactions that can complicate your current payment systems.
To give you all the information you need about crypto payments and how to choose a crypto payment provider for your business, read on.
Table of Contents
- What are the Pros and Cons of Crypto?
- What Do You Need to Get Started?
- What to Look for in a Crypto Payment Processor
- Best Crypto Payment Platforms
- Key Takeaway
What are the Pros and Cons of Crypto?
Before you add Bitcoin or other cryptocurrency payment options to your business, it is a good idea to determine if digital tokens will offer a net benefit for all operations. Cryptocurrency provides several positives for any merchant, but there are a few cons are worth exploring:
- Fees: With less regulation, there are also far lower fees compared to standard fiat currency transfers, especially for international or cross-border transactions. You can find some exchanges that charge fees as low as one percent. At the same time, some crypto exchanges have started to increase fee prices to meet the increased demand.
- Security: The technology that supports all cryptocurrencies is very secure, a feat it accomplishes by spreading the verification labor across many community users. That said, exchanges and digital wallets are at risk of hacking, and there is a lot of fraudulent activity and scams on certain protocols.
- Refunds: Cryptocurrency payments are irreversible, which can make refunding goods or services difficult. At the same time, you can always initiate new payments to customers who need returns without any chargeback costs.
- Volatility: Cryptocurrency has no ties to a stable underlying asset. As a result, digital tokens are speculative and can suffer from wild price swings. While this offers opportunities to increase your value, it also can cause havoc on accounting and fiat conversions.
- Business expenses: Cryptocurrency payments offer payment options and convenience to a growing base of potential customers, which will help your business’ overall conversion rate. Still, a new setup does come with extra expenses and can increase the complexity of your payment systems.
What Do You Need to Get Started?
If you decide that cryptocurrencies will be a welcome addition to your business and your customers, you will need to purchase and gain access to three crypto platforms before you can accept payments.
- A Digital Wallet: Cryptocurrencies are digital tokens, and so you need a digital wallet to send, receive, and store coins. There are several types of crypto wallets, but all you need to make trades is a hot wallet (a digital token holder directly connected to the internet). You can also purchase a cold wallet, a physical piece of hardware (like a USB stick) that can hold your funds offline. While not required, they are far more secure against fraud or hacking. Most businesses store the minimum amount of liquidity in their hot wallet to perform business transactions — the rest they leave on their cold wallet.
- A Crypto Exchange: Your digital wallet connects to a cryptocurrency exchange, the digital marketplace where you can buy and sell tokens. It is on the cryptocurrency exchange that you can convert your fiat currencies with the wide variety of available coins. Since anyone can make a cryptocurrency exchange (and some are open-sourced), choose your market according to the risk you are willing to accept. Popular exchanges such as Coinbase, Binance, CashApp, and Gemini are all secure and offer extended safety.
- A Payment Platform That Accepts Crypto: Some crypto exchanges offer digital wallets and a few limited methods to receive digital tokens via QR codes. But the standard route for a business with decent customer volume and extended security needs is to employ a crypto payment processor. The provider installs the infrastructure your business needs to accept crypto payments from your customers and make transfers to your hot wallet.
What to Look for in a Crypto Payment Processor
Not all crypto payment processors are the same or offer the same services. When choosing a service provider for your business, consider the following selection criteria:
- Fees: Most platforms follow a standard fee of 1% per transaction, but there are a few crypto payment providers with fees as low as 0.5% per transaction. If you plan to make a lot of transfers over large sums of money, fee structure can make a big difference.
- Integrations: There are over 8000 possible cryptocurrencies you can invest in, so search for a provider that will accept the most popular and useful tokens from your customers. On the other end, a payment platform with direct integrations into your current ecommerce payment setup can make transfers simple and easy.
- Support: Payment gateways for crypto are still a new phenomenon; a payment provider with good customer service and technical support can make your setup simple and hassle-free. Good service providers include receipt QR codes, auto coin conversions, and helpful plugins that create additional convenience for you and your customers.
- Security: As with any payment gateway, security is of utmost importance. Look for a service provider that includes multi-factor identification, as well as protocols that protect your funds and customer transfers from bad actors.
Best Crypto Payment Platforms
To help you make an informed decision about the crypto payment provider that is right for you and your business, we reviewed the top four most popular crypto services.
Bitpay is one of the top payment gateways available. The platform is known for its fast transfer fees, a focus on safe Bitcoin transactions, and near-zero system downtimes. Bitpay offers a flat-rate fee of 1%, the standard pricing structure for most large-scale processors. Of note, Bitpay has borderless payments, multi-lingual interfaces, and multi-lingual customer support, a feature that will attract businesses with global customer bases. The platform also has the necessary mobile applications to facilitate digital wallet exchange via smartphones, in addition to standard identification protocols. Lastly, Bitpay has open-sourced ecommerce plugins, which may be of use to small businesses who want to add unique features to their online vendor pages.
Coinbase is the largest payment provider, with a recorded 56 million users. Coinbase Commerce is a secondary launch from Coinbase itself, a prominent cryptocurrency exchange, which helps create simple wallet, exchange, and payment provider transactions. Since it has such resources at its command, it does offer a plethora of additional merchant services, and it has direct integrations with 12 ecommerce platforms. Transfer speeds are fast as you can make immediate trades on Coinbase’s exchange. The payment gateway is limited at the international level to a few select countries, but it also offers immediate fiat conversions for free (over the first $1 million in transaction volume) and a standard 1% per exchange fee.
CoinGate is an older, original gateway, but its claim to fame is its Point-Of-Sale integrations and mobile offerings. The platform’s calling card is its simple design and easy sale buttons that you can add to any of your web pages. Fees are standard at 1%, but customer reviews also state that rates on exchanges connected to CoingGateare are lower as well, a fact most likely attributed to their fixed fee prices while transfers settle. Transactions are slow on the platform, taking up to one hour at times. The platform only supports about 50 popular tokens, but Coingate has always put its focus on UX and simple user design in place of aggressive market tactics. With real-time integration with online ecommerce pages, it is a good option for smaller vendors or business merchants.
CoinPayments is known for its competitive pricing plans and unique crypto community features. For example, all merchant transaction fees are set at 0.5% per transaction, a cost that will be beneficial to large volume businesses. Still, in terms of its user base, CoinPayments is on the lower end of 70,000, which brings with it some risk. CoinPayments makes up for its small-sized offerings with attractive features such as airdrops (promotional stunts that offer free coins), auto coin conversions, and multi-coin wallets. Plus, the platform is in 200 countries worldwide and supports over 2000 different digital coins. It has fast transfers and all the standard integrations required for most ecommerce websites.
The infrastructure for crypto payments continues to grow, creating opportunities for merchants to offer a popular form of digital payment to customers.
While price volatility and potential security issues, it is understandable that some businesses are hesitant to accept crypto payments. Yet, with a safe digital wallet, cryptocurrency exchange, and a secure payment processor, you can make fiat to crypto exchange with little hassle and minimal setup time.
Consider using major payment providers such as Coinbase or Bitpay to facilitate secure crypto transactions within your business systems.