Blockchain technology has been integrated into major industries like healthcare, retail, supply chain, entertainment, etc., and is now making its way into the payment industry. Businesses are in search of new ways to expand their reach. The traditional payment systems are efficient in many ways but they have some limitations, such as lack of automation, delay in a cross-border transaction, and the involvement of financial intermediaries. New and new businesses are recognizing the capabilities of cryptocurrencies and making them a valid form of payment, similar to fiat currencies. Creating a payment gateway has become a necessary choice among businesses seeking to stay competitive in the marketplace and maximize their revenue opportunities. In this article, we will discuss what are crypto payment gateways and their workings.
What are Crypto Payment Gateways?
A crypto payment gateway is a dynamic platform for processing payments that enables vendors or merchants to accept payments in a variety of cryptocurrencies without compromising security. It enables consumers to make payments directly from one digital currency wallet to another. The safe transfer of sensitive wallet-related information from the payer to the merchant’s software is another duty of these payment gateways in addition to their primary duties.
This payment network is being used by businesses of all sizes more and more as they search for the most profitable, safe, and quick ways to make payments. Crypto payment gateways are based on the blockchain ecosystem, which offers advantages including transaction transparency and record immutability.
Since blockchains are decentralized, they avoid financial intermediaries such as banks from the payment process, which potentially enhances the transaction speed and shortens the lengthy payment processing steps. More and more individuals use this system, facilitating the use of digital currencies and contributing to the growing adoption of decentralized gateways.
Components of a Standard Crypto Payment Gateway
| For User | For Admin |
| Home page | Admin dashboard |
| User sign-in/sign-up | Admin sign-in |
| My profile | View users |
| Dashboard | View user deposit and withdrawal history |
| My wallet features a withdrawal facility | Merchant payment history |
| Deposit and withdrawal history | Merchant details |
| Transaction history | API category |
| Merchant tools | Security settings |
| API key generation | Support system |
| Account settings | Content management system |
How Does a Crypto Payment Gateway Work?
If you are familiar with the traditional payment gateway, then it won’t be a problem to understand the mechanism of crypto payment gateways. They work with the help of blockchain technology. In place of credit cards, they use a digital wallet that requires merchants to create a merchant account to accept payments in digital currencies. The transaction takes place on a decentralized peer-to-peer network, where nodes perform all the actions, such as exchanging payment data, validating them, and sending them to the public ledger. The wallet address works as an identity for both consumers and merchants involved in the transaction.
Whenever a block is added to the chain, the blockchain network will save the transaction information and ensure the irreversibility of transactions at the same time. Thus, a crypto payment gateway enables individuals to transfer their digital currency for a specific product or service via a decentralized payment system.
Below is the step-by-step process of how a crypto payment gateway works:
- When you place an order, the system will automatically record the payer’s data including your wallet address. The data will then be encrypted and transferred to the merchant’s web server through an SSL connection.
- The merchant scans the blockchain with the help of an integrated payment gateway, where nodes will verify, validate, and confirm the transaction.
- After confirming the order, the coins will be transferred to the merchant’s account. The payment gateway will inform both the merchant and you about the successful transaction of your assets.
- Merchants can convert these digital assets into real fiat currencies anytime at the real-time value of the currency.
Benefits of a Crypto Payment Gateway
Other than quick validation of transactions and eliminating third parties from the payment system, crypto payment gateways provide numerous benefits to both consumers and merchants.
Freedom from Chargebacks
Similar to blockchain technology, once the digital currency payment is completed via the payment gateway, it cannot be charged back or refunded. This unique feature appeals to entrepreneurs and large companies that own high-risk businesses.
Anonymity
Unlike traditional payment gateways, decentralized payment gateways do not require users to complete any registration or KYC verification processes. The platform allows users to join the network anonymously. For vendors who are concerned about privacy, this anonymity is advantageous, and it allows them to sell their digital assets privately.
Instant Processing
Crypto payment processing is extremely instant due to the lack of intermediaries. The whole transaction can be completed in less than 10 seconds. It helps merchants accept digital currency and exchange those currencies to fiat anytime they want.
Conclusion
Every business in the world has started adopting cryptocurrencies as a payment method. Crypto allows these businesses a simple way to expand their payment methods, ensuring security and access to a growing market. The crypto payment gateway provides seamless and secure transactions, making it simpler to integrate crypto payment solutions into their business operations. Additionally, with the help of crypto payment gateways, businesses can now simply convert and manage several digital currencies. The right crypto payment gateway enables you to utilize the benefits of crypto exchange and cryptocurrencies.