In the wake of the rise in cryptocurrency users, there has been a significant demand to allow cryptocurrency as a payment option. Despite the highs and lows in the past few months, many are positive for cryptocurrency to become the future of currency. There has enough support for cryptocurrency to make its case stronger. In particular, Tesla founder, Elon Musk, has remained vocal in backing up the cryptocurrencies.
Notwithstanding, several merchandise outlets, including McDonald's, have started taking some forms of cryptocurrency as a payment option. Cryptocurrency payments are made through cryptocurrency payment gateways. But do you know what it is? Let's start reading about the future of cryptocurrency as a payment option.
Cryptocurrency Payment Gateway
A cryptocurrency payment gateway is a digital currency payment processor. It works similarly to how payment processors such as gateways and credit cards work. Likewise, cryptocurrency gateways allow and accept digital payments and instantly receive fiat currency in exchange. There are several cryptocurrency payment gateway companies. Each of them ensures the elimination of any doubts or reservations that may forbid a user from making cryptocurrency payments.
Furthermore, digital currency payment gateways are optional. You don't have to use it unless you are sure of using it. Besides, you can use your personal cryptocurrency wallet to acceptor make cryptocurrency payments. In addition to it, the gateways remove the extra work of exchanging cryptocurrency and can manage a wallet right from your hands. The next ideal step to understanding how to pay with cryptocurrency is knowing how the Cryptocurrency payment gateway works.
Working of Cryptocurrency Payment Gateway
In general, the payment gateways are the companies that understand the risk of cryptocurrency transactions. They undertake the risk and facilitate transactions between merchants and the customers through the laters crypto custodial wallet. To know, follow the mentioned payment flow steps:
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At the checkout, let your customer chooses to pay in cryptocurrency (in-store, on the web, or in-app).
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They pay you the fair market value of the digital currency at the time of the transaction.
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The payment is instantly converted into the currency of your choice by the cryptocurrency payment service.
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The money then gets added to your provider's account and deposited into your designated bank account at the intervals specified in your service contract.
Looking at the cryptocurrency payment gateway, you may notice one thing. You need not have to worry about cryptocurrencies. All you have to do is ensure your cryptocurrency service provider deposits the funds into your account.
Transaction Fees
Like in any other financial transaction, the cryptocurrency payment gateway charges a validated transaction fee to facilitate the transfers. Furthermore, all the transactions go to a cryptocurrency wallet. If that currency is designed with a payment system, the provider will be charged transaction validator fees by the currency network. Also, the transaction validators validate blocks and transact on the blockchain. In exchange, it takes small payments in increments to validate cryptocurrency transactions. The providers pass these fees on to you and charge service fees to continue operating and providing their services.
Benefits and Drawbacks of Cryptocurrency Payment
We know that cryptocurrencies are decentralized and anonymous platforms. The system facilitates the exchange of two parties. However, some merchants and traders may deny payment in digital currency. It is mainly because they do not understand how cryptocurrency works. As a result, they remain skeptical of the system. For these reasons, it's critical to understand the benefits and drawbacks of payment gateways so you can decide how to accept cryptocurrency payments.
Benefits
Following are the benefits of the cryptocurrency payment gateway:
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A payment gateway removes the anonymity of who you deal with while preserving your customer's preference.
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If there are any payment issues, you can contact someone.
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You can accept payments from anywhere in the world in any cryptocurrency your service provider accepts.
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Receive the funds in your provider's account, which are then transferred to you.
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Reduces volatility and the risk of losing value while waiting for a transaction to be verified by the cryptocurrency network by paying you the market rate for the tokens at the time of the transaction.
Drawbacks
Following are the drawbacks of the cryptocurrency payment gateway:
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A payment gateway is a third party that cryptocurrencies were designed to avoid.
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Because you may be receiving payments from all over the world and in different time zones, you must rely on the provider's ability to provide uninterrupted service.
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You pay small transaction fees when you use your cryptocurrency wallet; when you use a cryptocurrency payment gateway, you pay more.
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If the payment gateway is compromised, you will lose any funds in your provider's account while you wait for them to be transferred.
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Payment gateways are companies that provide a service, so they will market themselves in a way that makes it appear as if you require their services when, in reality, you do not.
Conclusion
Cryptocurrencies are still something new for many. And since it involves money and finances, people will have doubts and concerns. Hence, cryptocurrency payment gateways are still not required to conduct digital currency transactions. So, unless you are not ready to make cryptocurrency payments, you can stick with the general ways.
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