Crypto payment is a fast-growing trend in the e-commerce industry. More and more online shoppers are opting for digital currencies as a way to pay for their purchases, thanks to the benefits of security, convenience, and anonymity. According to a report by Statista, the number of blockchain wallet users worldwide reached over 85 million in November 2022, up from 76 million in June 2021 or from 45 million in 2020. This shows a growing interest and demand for using cryptocurrencies for online shopping. However, not all online retailers are ready to embrace this new form of payment. Some may have doubts about the legality, reliability, or profitability of accepting crypto payment. Additionally, many also question how they can integrate crypto payments into their websites, what the advantages and disadvantages of using crypto payment gateways are, and what some of the best solutions available in the market are. In this article, these questions are explored, and some useful tips are provided for online shop owners who want to adopt crypto payment solutions on their platforms.
What is crypto payment and what are crypto payment gateways or crypto payment service providers?
Crypto payment is a method of transferring value using digital tokens or coins that are based on blockchain technology. Blockchain is a decentralized ledger that records transactions in a secure and transparent way, without the need for intermediaries or central authorities. Crypto payment allows online shoppers to pay for their goods and services using cryptocurrencies such as Bitcoin, Ethereum, Litecoin, or Dogecoin, among others. These cryptocurrencies can be stored in digital wallets that can be accessed through mobile apps or web browsers.
Crypto payment gateways are services that enable merchants to accept and process cryptocurrency payments on their websites. They act as intermediaries between the customer and the merchant, facilitating the exchange of crypto to fiat currency (or vice versa) and ensuring the security and validity of the transactions.
Crypto payment gateways usually provide a plugin or an API that can be integrated with various e-commerce platforms, such as Shopify, WooCommerce, Magento, etc. They also offer a dashboard or a portal where merchants can manage their crypto payments, view transaction history, generate invoices, request refunds, etc.
Why should online retailers consider accepting crypto payment?
There are several advantages of accepting crypto payment for online retailers. Some of them are:
- Crypto payment can attract new customers who prefer to use digital currencies over traditional payment methods. According to a recent survey by Deloitte, 75% of retailers plan to accept either cryptocurrency or stablecoin payments within the next two years due to an increased shoppers demand on paying by crypto currencies. By offering crypto payment as an option, online retailers can tap into this growing market and increase their sales and revenue.
- Crypto payment can enhance customer loyalty and satisfaction. By accepting crypto payment, online retailers can show that they are innovative and responsive to customer needs and preferences. This can help them build trust and reputation among their customers and differentiate themselves from their competitors.
- Additionally, crypto payment can provide customers with more privacy and security, as they do not have to share their personal or financial information with anyone.
However, there are also some challenges and drawbacks of using crypto payment gateways, such as:
- Volatility: Cryptocurrencies are known for their high price volatility, which can affect the value of the payments received by the merchants. For example, if a customer pays with Bitcoin when it is worth 50,000 EUR and the merchant converts it to fiat currency when it is worth 40,000 EUR, they will lose 10,000 EUR in value. To mitigate this risk, some crypto payment gateways offer instant conversion or settlement features that lock in the exchange rate at the time of the transaction.
- Regulation: Cryptocurrencies are subject to different legal and regulatory frameworks in different countries and regions. Some jurisdictions may impose restrictions or bans on the use or acceptance of certain cryptocurrencies, which can limit the availability and accessibility of crypto payment gateways. Merchants need to be aware of the laws and regulations that apply to their location and their customers’ location before choosing a crypto payment gateway.
- Education: Cryptocurrencies are still relatively new and unfamiliar to many consumers and merchants. There may be a learning curve involved in understanding how they work and how to use them for online payments. Merchants need to educate themselves and their customers about the benefits and risks of using crypto payment gateways and provide clear instructions and support for using them.
Types of Crypto Payment Gateways
There are different types of crypto payment gateways available in the market, each with its own features and functionalities. Some of the main types are:
- Direct: These are crypto payment gateways that allow merchants to accept cryptocurrencies directly into their own wallets without involving a third-party service provider. This gives merchants more control and autonomy over their funds but also requires more technical knowledge and responsibility for managing their wallets and transactions.
- Hosted: These are crypto payment gateways that provide a hosted service where customers are redirected to a separate website or page to complete their payments. The service provider handles the conversion and settlement of the funds and transfers them to the merchant’s bank account or wallet. This simplifies the process for both parties but also involves more fees and less customization options for the merchants.
- Hybrid: These are crypto payment gateways that combine elements of both direct and hosted services. They allow merchants to accept cryptocurrencies directly into their wallets but also offer additional features such as conversion, settlement, invoicing, reporting, etc. These services provide more flexibility and functionality for the merchants but also require more integration and maintenance efforts.
Examples of Crypto Payment Gateways or service providers
There are many crypto payment providers available in the market today, each with its own advantages and disadvantages.
There is a short description of popular ones:
- Coinbase Commerce is one of the most well-known and widely used crypto payment gateways in the world. It supports Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Dai, USD Coin, etc. It integrates with Shopify, WooCommerce, Magento, etc. It offers instant conversion or settlement features that lock in the exchange rate at the time of the transaction. It also provides a dashboard where merchants can manage their payments, generate invoices, request refunds, etc.
- BitPay is one of the first and most established crypto payment gateways in the market. It supports Bitcoin, Bitcoin Cash, Ethereum, Dogecoin, etc. It integrates with Shopify, WooCommerce, Magento, etc. It offers versatile payout options, such as bank deposits, stablecoins, prepaid cards, etc. It also provides a dashboard where merchants can manage their payments, generate invoices, request refunds, etc.
- CoinGate is a crypto payment gateway that supports over 50 cryptocurrencies, including Bitcoin, Ethereum, Litecoin, Ripple, etc. It integrates with Shopify, WooCommerce, Magento, etc. It offers instant conversion or settlement features that lock in the exchange rate at the time of the transaction. It also provides a dashboard where merchants can manage their payments, generate invoices, request refunds, etc.
- GoCrypto is a global payment facilitator that introduces a wide range of technologically-advanced crypto and card payment solutions for all business levels. It operates as a global payment scheme connecting all the stakeholders interested in crypto — crypto users, crypto wallets, crypto exchanges, cashier system providers, payment solution providers and merchants. GoCrypto supports crypto, card, and digital payments through its smart POS terminal, which lets merchants instantly expand their offer with the newest payment trends and process transactions from their store or on the go. GoCrypto also offers free crypto payment plugins for major eCommerce platforms and custom solutions tailored to every need. GoCrypto has over 100,000 locations in 70 countries and supports more than 50 cryptocurrencies.
The gateways or service providers presented above are not the only ones available in the market, and each platform has its own strengths and weaknesses. Therefore, it is important to compare different solutions and find the one that best suits your needs and preferences.
How can online retailers start accepting crypto payment?
There are different ways to integrate crypto payment into an e-commerce platform. Some of the options are:
- Using a third-party service provider. These companies act as intermediaries between online retailers and customers, facilitating the conversion of cryptocurrencies into fiat currencies and vice versa. Online retailers can choose the service provider that suits their needs and preferences in terms of fees, features, security, and support.
- Using a plug-in or extension. Another option is to use a plug-in or extension that can be installed on an e-commerce platform such as Shopify, WooCommerce, Magento, or PrestaShop. These plugins or extensions allow online retailers to accept crypto payment directly on their website without relying on a third-party service provider. Some examples of these plug-ins or extensions are CoinPayments.net, CryptoWoo, Coinify, or BTCPay Server.
- Using a custom solution. The most advanced option is to develop a custom solution that can handle crypto payment on an e-commerce website. This option requires more technical skills and resources but offers more flexibility and control over the integration process. Online retailers can use various tools and frameworks such as Bitcoin Core, Ethereum Web3.js, Litecoin Core, or Dogecoin Core to create their own crypto payment system.
Crypto payment is a promising opportunity for online retailers who want to expand their customer base and improve their customer loyalty and satisfaction. However, there are also some challenges such as volatility, regulation, and education.
There are different types of crypto payment gateways available in the market, such as direct, hosted, and hybrid. Some examples of popular and reputable ones are mentoned above.
E-commerce businesses that want to integrate crypto payment solutions into their platforms need to consider several factors such as the type, the features, the fees, the supported currencies, the integrations, the regulations, and the customer preferences of the crypto payment gateways they choose.
By doing so, they can leverage the potential of cryptocurrencies to enhance their online shopping experience and grow their business.
* The article was created as part of the Bitcoin Talents training programme organized by the Frankfurt School of Finance and Management — Blockchain Centre.