Crypto Payment Gateways: 4 Top Crypto Payment Processors

More than a decade has passed since Bitcoin’s launch in 2009, but some businesses are still against the idea of accepting Bitcoin (BTC), Ethereum (ETH), and other altcoins as payment due to crypto’s volatility. 

Many others, however, believe cryptocurrency payments are inevitable, with big brands like Overstock.com and Shopify already accepting digital currencies. 

Because cryptocurrencies use decentralized peer-to-peer (P2P) computer networks (aka blockchains), adding a crypto checkout feature to a standard payment processor isn’t so straightforward. If companies want to welcome crypto assets online or in-store, they need new technologies to create a safe and seamless payment experience. 

Enter: crypto payment gateways. With a market cap of more than $1 billion, these software integrations have become the staple solution for crypto-to-cash conversions. Many financial analysts predict crypto payment gateways are on track to become a multi-billion-dollar industry as more businesses accept Bitcoin. 

When it comes to understanding crypto payment gateways and how they work, here’s what you need to know.

What are crypto payment gateways? 

A crypto payment gateway is any program, device, or processor for merchants that converts digital assets into fiat currencies. 

When businesses use a crypto payment gateway, they let customers pay for goods and services using crypto, but the company receives an equivalent amount of fiat in their account. The payment gateway provider handles all crypto-to-fiat conversions on the backend to provide customers and merchants with a frictionless payment experience. 

How do crypto payment gateways function?

Although each crypto payment gateway offers different features and solutions, most integrate into a merchant’s point-of-sale (POS) software or e-commerce portal. Here’s how they work:

• Once customers finalize goods in their carts, they navigate to the website’s checkout page. 
• At checkout, customers have the option to send accepted cryptocurrencies to an official address, which is typically represented by a scannable QR code. 
• After successfully transferring a crypto asset to the provided address, the payment gateway’s provider converts the digital asset into the merchant’s preferred fiat currency and sends cash to a linked bank or business account. 

Note: Some crypto payment processors also work through popular fintech apps like PayPal or e-commerce sites like Shopify. For example, if businesses already accept payment from PayPal, people who hold Bitcoin in their PayPal wallets have the choice to spend their BTC through PayPal’s Checkout with Crypto portal. Although customers send BTC for their purchases, the merchant receives a fiat equivalent in their PayPal app.   

Pros and cons of crypto payment gateways

In short, crypto payment gateways allow businesses to enter the crypto economy without needing to store and convert digital assets. While these programs are a convenient option for many companies, they don’t provide users with the decentralization of P2P crypto transactions. Using blockchain payment gateways also comes with additional expenses and counterparty risks merchants must factor into their strategies. 

Pros of crypto payment gateways 

• Easy crypto payment experience: Customers who know how to send cryptocurrencies from a private wallet won’t have difficulties transferring coins or tokens to a payment gateway’s QR address. Plus, since crypto payment gateways take care of currency conversions, merchants don’t need to worry about constantly cashing out their Bitcoin or securing it in a cold storage wallet. 
• Borderless transactions: Crypto coins and tokens are non-sovereign currencies, meaning no central authority controls or regulates them. Instead, these assets exist on an online network. So as long as people have access to the internet, they have the freedom to store and transfer digital assets around the world. From a merchant’s perspective, accepting cryptocurrencies helps boost international commerce, which is a positive trait in the global economy. 
• No volatility risk with fiat exchange: The cryptocurrency market’s wild price movements sometimes scare business owners from accepting digital coins and tokens. Although the market values of cryptocurrencies remain volatile, payment gateways eliminate this risk by converting crypto to cash. With these payment integrations, companies don’t need to monitor sites like CoinMarketCap to see their purchasing power and predict future expenses. 
• New services to new customers: Merchants don’t need to believe in the future of crypto or learn how it works to expand their operations with crypto payment gateways. Since these gateways exchange cryptocurrency for fiat, a Bitcoin payment method won’t add BTC to a business’ bottom line. As more younger consumers express an interest in using crypto for daily purchases, payment gateways allow companies to appeal to demographics like millennials and Gen Z. 

Cons of crypto payment gateways 

• Extra fees: Crypto payment gateway providers charge additional processing and conversion services fees. Merchants need to review the average fee schedule for their preferred gateway and consider how these costs fit into their business plan. 
• Steeper learning curve: Although crypto payment gateways simplify the crypto payment experience, customers and companies new to crypto have extra questions about interacting with these services. Merchants must invest time and resources in teaching employees how to operate new payment portals and educate customers about proper crypto payment procedures.
• Counterparty risk: Businesses integrating with a crypto payment processor must trust the security standards of the company operating the payment gateway. Even if a company has a high reputation in the payment processing space, there’s an extra risk of hacks or exploits when entrusting third parties with sensitive financial data. 
• Not fit for businesses that want crypto assets: While some crypto payment gateways offer crypto payment solutions, most focus on converting digital assets to cash. So if merchants want to add cryptocurrencies to a private digital wallet and take advantage of P2P payments, crypto payment gateways aren’t the best solution. Instead, crypto-friendly companies use personal wallet addresses to receive digital currencies and eliminate counterparty risks and service fees.