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What Are Payment Gateways?

The cryptocurrency market is highly volatile. So, in 2017, Bitcoin’s cost fell from $20,000 to $11,000, but now this figure exceeds $ 60,000. Such leaps are forcing companies that accept payments in digital currency to look for solutions to convert crypto to fiat quickly. It will help the presence of a cryptocurrency gateway. It provides the prompt translation of digital coins into dollars, euros, hryvnias, or other currencies. Also, using the gateway, you can automate the process of accepting payments as much as possible. Let’s take a closer look at this point.

What is a payment gateway?

A payment gateway is a unique service that deals with bank card authorization and processing of payments. Both online merchants and offline sellers can use it in general. A payment gateway is needed to encrypt users’ data and transfer transactions between a website/mobile app, a payment processor, and a bank.

How the payment gateway works

In a nutshell, a payment gateway makes it much easier to establish a connection between your website, payment processing, and the issuing bank of the card you used to pay for the item. In this case, safety is always at the top. Therefore, during the transaction, all private data of the buyer is reliably encrypted.

Despite the speed of the payment process, several steps are performed at once in these few seconds. After paying for the goods and placing an order, the transaction data is sent to the payment processor in encrypted form. It, in turn, contacts the issuing bank to confirm or reject the withdrawal of funds. The received response is sent to the payment gateway and from there to your business website. The data is decrypted and displayed on the screen. If the transaction is successful, the seller executes the received order.

What is a cryptocurrency gateway

However, gateways work not only with traditional but also digital currencies. Accepting payments in crypto with the following exchange for fiat is performed by a different type of gateway called “cryptocurrency gateway.” Now such processors support Bitcoin and with many alternative coins – Ethereum, Litecoin, Ripple, and Bitcoin Cash.

Cryptocurrency gateways offer the following options:

  • support for digital currencies (coins, tokens, stablecoins);
  • extended reporting system;
  • a quick exchange of crypt for fiat or other crypto;
  • simple API for business;
  • convenient opportunities for B2B and B2C clients;
  • automation of payments;
  • integration of the gateway with leading liquidity providers.

Why does the business need a crypto gateway?

There are many arguments for adopting cryptocurrency as a means of payment. Let’s describe the main advantages of digital currency transactions:

  1. An advantage over competitors. Companies in practically all markets are looking for unique opportunities to stand out. If you accept BTC or any other crypto coin as a means of payment, the buyer will have a superb choice of paying for the purchase. As a result, this can play a decisive role in your company’s choice by the client.
  2. No refunds. It usually happens when the buyer or card issuing bank disputes the transaction. Often, you can get the funds back, which is what scammers use. And merchants have to rack their brains to prove the validity of the transaction. Transactions with digital currencies cannot be canceled, so you cannot dispute the payment. It means that the risk of fraud when dealing with cryptocurrencies is teeny.
  3. There is no need to create movable stocks. As we already said, it’s impossible to issue a chargeback when paying with crypto. Therefore, there is no need to create and maintain so-called movable stocks. In this case, the company that issued the card can reserve a portion of the gross profit and use it as insurance against loss of funds caused by refunds. When accepting crypto coins, you receive the entire amount in full.
  4. The speed of transactions. With the standard acceptance of payment (through a bank card), funds may be credited to the account after a few weeks. Due to intermediaries’ presence in such transactions (for example, the merchant’s bank and the buyer’s card issuing company must verify and confirm/reject each payment). Bitcoin transactions are much faster. It’s because they are confirmed by distributed nodes-computers called “miners.” They receive a reward for confirmation. Therefore, funds will be credited to the account in just a couple of minutes.
  5. Accept one cryptocurrency and receive fiat or another crypto. So, most digital currency gateways allow you to accept digital coins and automatically convert them into traditional money (or other tokens). Roughly speaking, after accepting payment in Ethereum, you will receive its equivalent in US dollars. In this case, the conversion will take place even before the funds are credited to the account. Therefore, the risk of the impact of volatility is reduced to a minimum.
  6. Fast bulk payments. Also, crypto gateways offer functionality for quickly sending funds to multiple recipients at the same time. This function is called “bulk payments.” It is designed to save time and reduce commissions, as opposed to making each payment.

Let’s agree that all these benefits are pretty crucial for any business, regardless of size and focus. And before considering popular crypto gateways, let’s think about why the future belongs to cryptocurrencies?

Cryptocurrencies as the money of the future

Bitcoin and Ethereum hold leading positions in the digital asset market. Trading volumes in these assets account for more than 70 percent of the total. Although the number of businesses that accept crypto coins is relatively low, many entrepreneurs see Bitcoin as a marketing tool.

Bitcoin mania, which took over the world back in 2009, reached its climax only 8 years later. It is not a surprise because it was thanks to BTC that the world learned about a unique technology called “blockchain.”

Despite the steady rise in the value of the BTC since the release of the first coins, the boom of 2017 influenced the digital currency’s popularity. Then the cost of one BTC token increased from $1,000 to $20,000! Naturally, after this, there was a rapid collapse of the stock exchange rate. But now, this coin is experiencing a new rise in price. One BTC is being traded for more than $60,000, and the market cap has exceeded 1 trillion dollars!

Also, digital currencies can be transferred between users within a decentralized P2P network. Therefore, no intermediaries are needed to carry out the operation. It allows you to use tokens for their primary purpose – paying for goods and services.

If an entrepreneur cares about his own business’s success and quality, he will not neglect the payment methods. So, support for crypto can increase the flow of customers, and with it, income. Hence, digital coins are a great way to maintain your position in highly competitive markets.

Top 5 best cryptocurrency gateways

So, we figured out the basics of cryptocurrency gateways. Now let’s take a look at the 5 most popular payment processors.

CoinsBank

This processor is considered one of the most popular and has earned a serious reputation in the crypto community. The site is available through a unique mobile application for Android and iOS devices.

The gateway only works with Bitcoin. However, it automatically converts coins to popular traditional currencies (US dollars, euros, pounds sterling, and many more). Also, you can instantly top up and withdraw funds from it with a click. This feature will be incredibly convenient for large businesses. And the latest security system is responsible for protecting data and money, which also provides for two-factor authentication.

Coingate

The gateway stands out with a handy app for smartphones and tablets. It allows you to quickly and easily make payments in digital currencies. The processor supports over 40 types of crypto coins. Therefore, merchants can expand the number of payment methods using this cryptocurrency gateway.

Coingate also offers dozens of plugins and even the ability to connect a dedicated button on the website for direct BTC payment. The fee for processing transactions in the gateway is 1%, and the transfer to the entrepreneur’s account takes about an hour.

Shopify

The storefront software company also offers a reliable crypto gateway. It is used by thousands of stores around the world, which already speaks for itself.

The main advantage of Shopify is the easy gateway setup. The site has a lot of usefulness, incredibly open APIs. They allow you to link third-party payment gateways for faster and more transparent payment processing.

But there is also a significant drawback. To use the Shopify solution, you need to create an account. There is also a floating commission for crypto transactions. It depends on the previously selected payment processor.

Bitpay

This gateway has a rather exciting function. You can set the withdrawal operation’s speed at any time. Additionally, Bitpay uses two-factor authentication. It allows you to maximally secure merchant accounts on the service. It is also worth noting the fact that the payment processor was created specifically for people who are not tech-savvy. Therefore, Bitpay is also praised for its simplicity and convenience.

The free plan offers two restrictions on accepting payments: $1000 per day or $10,000 per year. For large transaction volumes, a 1% processing fee is charged. This fact makes Bitpay the top processor for small businesses and tech startups. The only drawback lies in the service coverage: direct banking operations are available only in 40 countries of the world.

Coinbase

This site is the only exchange on our list. However, the most prominent marketplaces also offer everything you need to accept payments. The Coinbase payment gateway instantly converts crypto to fiat, so the merchant doesn’t need to apply for a withdrawal of funds.

The high-level protection of the service ensures the security of transactions. And the site itself offers many unique features. For this, Coinbase has earned a reputation as one of the most reliable platforms.

The exchange offers an instant payment conversion service for free, but only for the first million transactions. Upon expiration of this limit, the platform withholds a processing fee of 1%.

Crediting funds from cryptocurrency payments takes no longer than 3 days. Therefore, companies of all sizes can use Coinbase as a payment gateway. 

Conclusion

So, we just found out what payment gateways are. It’s time to sum it up. Payment gateways make it much easier to accept funds for goods and services. Thus, they reliably encrypt data, protect the buyer and seller from fraud, and speed up the merchant’s receipt of funds.

There are dozens of payment processors available on the market. But in this article, we looked at the sites that you can trust. They have managed to earn a reputation in the crypto community and help thousands of entrepreneurs conveniently accept payments in digital currencies. You can even do this from your smartphone or tablet. Therefore, the broader distribution of such solutions for business is a matter of time.

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