With the growing usage of cryptocurrency, crypto payment gateways or crypto processing methods are progressively changing the way businesses operate.
As crypto payment gateways allow merchants to facilitate the payment of goods and services using cryptocurrencies such as Bitcoin, Ethereum, USDT, and other cryptocurrencies, they also provide businesses with the option to convert cryptocurrency into fiat with no friction and hold it as a digital asset.
Crypto payment gateways also provide businesses with benefits over traditional processing methods, such as lower transaction fees, faster processing times, and access to a worldwide audience with almost no restrictions globally.
This blog will explore what crypto payment gateways are, the benefits for businesses, and various use cases, across different industries, of how crypto processing systems are changing the landscape of commerce in this new digital age.
What is a Crypto Payment Gateway?
A crypto payment gateway is a digital framework that allows merchants to accept cryptocurrency payments from customers for certain goods or services.
Similar to traditional payment processors such as Stripe or PayPal, but in reference to a blockchain asset, the crypto payment gateway can either place the cryptocurrency into a fiat currency (i.e., USD) and process the payment, or it will allow the business to hold the digital assets in a wallet.
What distinguishes it is the decentralization, global availability, and irreversibility of transactions. Transactions are validated on blockchain networks, offering increased security as well as transparency.
Most gateways support multi-coin transactions, smart contracts, and integration with e-commerce platforms such as WooCommerce, Shopify, and Magento.
In general, they also have lower fees, and chargebacks don’t exist. As it becomes a common way to transfer value, so too will crypto payment gateways become commonplace for progressive businesses.
Benefits of Using Crypto Payment Gateways for Businesses
1. No More Geographical and Banking Restrictions
Using crypto payment gateways removes the geographical and banking barriers that can exist when businesses transact with customers or suppliers around the world. There is no longer a monetary conversion factor, waiting for kind of approvals or financial barriers for a merchant in the US to sell to a customer in Nigeria.
Countries that suffer from poor banking or a faulty banking system can suffer because cryptocurrency solutions do not have the same burdens.
Because cryptocurrency is decentralized, there are no intermediaries approving transactions or holding them, which leads to quicker and safer cross-border payments. This situation creates opportunities for business, digital and physical products, as well as expanding marketplaces for stores looking to transition from local to global businesses.
2. Lower Transaction Fees and No Chargebacks
Traditional payment gateways charge between 2%–5% per transaction, and chargebacks and fraud-related losses are typically always the responsibility of the merchant.
With crypto payment gateways, transaction fees are much lower (usually around 0.5%–1%), and chargebacks are impossible as the blockchain is immutable and cannot be reversed once the transaction has been validated.
This has far-reaching implications for any industry that has high transaction volumes, such as e-commerce or gaming, or for every industry that sells digital goods and can face chargeback fraud that can become quite costly. Lower fees meant higher margins for businesses and, hopefully, lower prices for consumers.
3. Faster Settlements and Real-Time Transfers
A crypto payment transaction can settle in seconds or minutes, depending on the blockchain network. Traditional payment processors can take anywhere from 2–7 days to clear funds, especially cuts for international payment processors that have to navigate multiple banks (both customer and client). The benefits of using crypto payments for merchants are that they can quickly see their funds confirmed and available immediately.
This speed assists in improving cash flow for businesses while enhancing the user experience, especially in domains that have high-frequency usage, such as ride-hailing services, streaming subscriptions, or food delivery services.
For example, a freelance designer who contracts clients from all over the world can receive their payment in crypto, instantly without having to wait for any banks or intermediaries.
4. Increased Security & Privacy
Set on a public ledger, all crypto payments are transparent and traceable by design, and because crypto wallets use cryptographic keys to authorize a transaction, they offer less potential exposure to hacks or data breaches than case details would provide when stored on centralized servers.
Therefore, for users who like to enjoy a bit more privacy, there are additional upsides related to the fact that transactions themselves are pseudonymous. Which is especially valuable in a part of the world that has data privacy concerns.
Additionally, anywhere businesses are sending customers’ sensitive data, reduced compliance risk and customers’ peace of mind around the privacy of information are valuable benefits.
Use Cases in the Real World by Industry
1. eCommerce and Online Retail
For eCommerce and online retail merchants, crypto gateways are changing how merchants receive payments from customers. Plugins allow online retailers to offer customers a simple option to pay with Bitcoin, Ethereum or stablecoins with just a few clicks when using platforms like WooCommerce, Shopify and Magento.
For example, Overstock.com is an online retail leader which embraced bitcoin early on; Overstock.com was one of the initial major retailers to accept Bitcoin in 2014.
Today, a variety of Newegg and Shopify-powered merchants are either utilizing or at least offering crypto checkouts. Crypto offers tech-savvy consumers the option to transact with a decentralized payment. Bitcoind gives them an added sense of privacy in their transaction.
From an operations perspective, merchants gain efficiencies with crypto pathways by removing operational limitations like lower costs, no geographical restrictions, and much lower chargeback risk. Stable coins like USDT or USDC gives you price stability and allows you some of the operational efficiencies crypto can provide.
2. Travel and Hospitality
The travel sector is also getting into the action, airplanes, hotels, roadmap, travelers can pay in digital currencies, such as Bitcoin. Travelers can pay for cryptocurrencies with sitesgive Travala and CheapAir. Thallowavel crypto sites, in addition to accepting multiple cryptocurrencies, sometimes provide discounted prices for crypto users.
For global travelers, the issue of currency exchanges, delayed or excessive banking fees, is moot with digital currencies. Hotels, airlines, and tour companies can enjoy a lack of chargeback risk and speedy settlement.
In 2014, airBaltic became the first international airline to accept Bitcoin. This move certainly elevated airBaltic’s image in a travel tech space open to innovation.
In response to the dramatic rise in digital nomadism, hotels and tourism agencies in countries such as Thailand, the UAE, and Switzerland are adding crypto payment options to cater to a growing number of digital nomads and a wealthy population of crypto traders.
3. Gaming and eSports
Stand-alone video game development has established a new economy within gaming after accepting crypto payment gateways. Gamers can spend crypto on anything from premium subscriptions or in-game items to content.
The best part is, a crypto wallet can allow gamers to earn and spend cryptocurrency directly in-game (the best examples are blockchain games like Axie Infinity or The Sandbox).
For developers, the perceived advantages of this new wave of monetization options are immeasurable- international audiences with few transaction costs, access to speedy little transaction microtransactions, while removing potential chargeback risks associated with traditional payment. Also, new monetization models for developers, such as sales of NFTs, and play-to-earn models for cryptocurrencies.
Ultra and Enjin are creating complete ecosystems for crypto-based gaming. With their platforms, gamers can trade items player-to-player, have on-platform liquidity for secondary markets, and run cross-game ecosystems, all because of crypto payments.
4. Health and Telemedicine
Health care, and specifically telehealth, is one sector where crypto payment gateways facilitate seamless payments for cross-border consultation, diagnostics, and medication purchases. Crypto payments can also ensure patient anonymity while allowing them to avoid providing sensitive financial information.
Organizations such as Dentacoin and Medicalchain are developing blockchain platforms that enable users to pay for healthcare services, keep medical records, and pay doctors, all utilizing cryptocurrencies.
Patients in regions with unbanked problems can access enhanced services without having to rely on the reliable availability of the local currency, and without worrying about local currency volatility or the net worth required by lending institutions to have credit access.
It has an application in medical tourism too. The overseas patient can pay the hospital or seek treatment in crypto for surgeries or treatments.
5. Real Estate
The real estate sector has a new crypto venture with platforms enabling property to be purchased using crypto. Payment gateways allow investors to rent or purchase property, with on-chain capture of the transactional history.
Companies like Propy and RealtyBits are allowing property buys to be made with crypto in the United States, Europe, and the Middle East. For international buyers, the ability to negotiate without slow, costly international transfers and close a deal in a much shorter time frame is substantial.
Recall that another trend emerging is the tokenization of real estate into digital tokens that provide ownership shares of the property. This opens real estate ownership and investment opportunities to a worldwide audience through fractional ownership made achievable through crypto payment gateways.
7. Education and Online Learning
As schools and online learning services adopt crypto payment options to pay for tuition, certification, and premium content, education and online learning is opening payment options to students from underbanked parts of the world, giving them access to the same educational services as anyone else in the world.
Interestingly, universities like Lucerne University of Applied Sciences, a university in Switzerland, and King’s College, a university in New York, are accepting Bitcoin as tuition, and online platforms like BitDegree ultimately allow users to enroll using crypto and pay in crypto.
This ability to pay with crypto democratizes access to knowledge, removes geographical and economic barriers to education, and enables institutions to create innovative funding models for students, for example, through NFTs and blockchain records as evidence of their learning achievements or certifications.
Final Thoughts: The Future of Crypto Payment Gateways
According to Allied Market Research, the global crypto payment gateway market is expected to climb to $4.12 billion from $1.4 billion by 2031, growing at a compound annual growth rate (CAGR) of 16.8%.
It is important to note that crypto payment gateways are not a fad or a passing trend; they are part of the future of digital commerce, and the introduction and use of crypto payment gateways will only increase.
Crypto payment gateways offer low fees for transactions, quicker processing for businesses and consumers, global access to pay anywhere in the world, and enable transparent and open payment systems that give consumers options and recourse in ways traditional systems can’t offer.
As more businesses/industries around the globe move to blockchain and crypto, we will only see an increase in consumer requests for crypto payments and engagement in those payment methods.
When businesses accept crypto as a payment option early, they are looking to not just provide a service to an expanded pool of digitally-savvy users, but they are planning for the next ten years of innovation for possibly the next wave of the future!
Get started accepting crypto today with a secure, scalable, and easy-to-use payment portal for your business. You can launch your own payment gateway with a crypto payment gateway script that makes the process hassle-free.
Future-Proofing Payments: Industry Use Cases of Crypto Payment Gateways was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.