An Ultimate Guide to Crypto Payment Processing

What Is Cryptocurrency Payment Processing?

Crypto payment processing is a closed system that is based on a payment algorithm. It is a unique program code that allows the operator to conduct different financial operations. All of them are related to digital payments for both fiat and cryptocurrencies. When we look at crypto payments, this system contains numerous mathematical calculations that ensure a smooth processing of transactions within a single cryptocurrency payment gateway. In its turn, the gateway includes several essential elements, and transactions are not possible without them.

How Does Crypto Processing Work Exactly?

A visualization of how crypto payments are processed can be seen in the scheme below. Each of the structural parts is essential for correct and effective payments. Therefore, the setup of crypto payments should be provided by experts to ensure smooth work and professional maintenance.

Merchant Setup

Everything begins with merchant setup when you plan to use a cryptocurrency payment processing system. To establish it right, we encourage you to contact CatPay specialists and provide them with all the information they might need. It is essential to specify preferred cryptocurrency conversion, settlement options, cryptocurrencies that should be accepted for payments, etc.

Integration

Now, the merchant services should undergo the integration with the crypto payment gateway. The business is provided with an API and plugins that are compatible with a wide range of e-commerce platforms. The integration is important as it allows the merchant’s website to have a direct interaction with a cryptocurrency processing system.

Customer Checkout

At this point, everything is ready for customers to make payments for goods and services with crypto. When payout is initiated, the gateway generates a payment option, and customers can select a preferred cryptocurrency for checkout. This process is performed automatically, and it becomes possible thanks to the setup made in the initial stage.

Payment Initiation

When a customer selects the preferred cryptocurrency, they will also see the amount they should pay in cryptocurrency and fiat. The calculation is based on the actual conversion rates. This stage is necessary to ensure that you, as a merchant, receive a correct payment in fiat when a customer initiates the payouts.

Transaction Broadcasting

The next thing that happens when payment processing in crypto is in progress is that the wallet address is provided. A customer then needs to copy it and insert it in their crypto wallet or scan a generated QR code and confirm the payment in the wallet. After that, the transaction is in progress, and money will soon arrive in a merchant’s wallet.

Payment Confirmation

The final stage is payment confirmation which is made on the blockchain itself. Depending on the selected cryptocurrency and network, there is a predefined number of blocks that should be confirmed in the system to complete the transaction. As soon as this number is reached, the payment is considered to be confirmed. Thus, the purchase and payment for it are officially completed.

Currency Conversion and Settlement

Currency conversion and settlement are made while the payment is still in progress, so real-time exchange rates are used. It is a point that needs attention, as sometimes rates might be more beneficial at a certain period of time. As a merchant, you can select which currency you would like to convert your revenue in to decrease the impact of volatility that is typical for cryptocurrencies. Fortunately, CatPay has a wide choice of fiat and digital currencies.

Different Types of Crypto Processing Solutions

Cryptocurrency payment processing is quite a complex system with different solutions and opportunities for merchants. Thanks to such diversity, businesses can pick those that are the most suitable for their needs. Everything depends on the size of your business, how many purchases are made monthly, and how many customers you have. We have described the three best types of crypto-processing solutions below so you can select one of them with complete confidence that it is what you actually need.

Cryptocurrency Payment Gateways

Crypto payment gateway is a ready-made solution for merchants who would like to accept digital currencies for payments at their online stores. It is a perfect option if you would not like to spend much time and resources on setting up all the important functions for successful instant transaction processing.

Thus, the solution is basically a third-party payment service that does everything for you in terms of crypto payment setup, integration, and maintenance. The provider of payment gateway for digital currencies is a mediator between customers and your business. It registers crypto holders' and payers' data, converts crypto into fiat, initiates payment verification, processes transactions, and transfers money to merchants.

Crypto Point of Sale (POS) Systems

While the above-mentioned solution is excellent for online stores, it is not a great option for physical stores. If your business is not conducted online, we can recommend a crypto Point of Sale (PoS) system. This solution is a first choice for those merchants who are willing to facilitate crypto payment processing offline. POS provides businesses with enhanced security and reduced transaction fees. Moreover, they can expect global acceptance and a wide variety of accepted cryptocurrencies. As a result, integration of crypto POS solutions might be a good way to increase your sales in physical stores.

Direct Wallet-to-Wallet Transfers

Direct payments from wallet to wallet are another option for businesses. Yet, it has more restrictions and limits than the two other options mentioned above. If you plan to use wallet-to-wallet crypto processing on the website, you should keep in mind that this option is suitable for small businesses. It does not allow you to integrate a wide range of currencies for payment, as you need to have wallet integration for each token. Moreover, be ready to keep all the financial details up to date. Still, if your aim is to have the lowest cryptocurrency processing fees and avoid extra expenses, wallet-to-wallet payments might be perfectly suitable for you.

Benefits of Cryptocurrency Payment Processing

You might still be hesitant about whether a cryptocurrency payment processing system is worth your attention and if it is a good idea to integrate it into your business. The following advantages of this solution might help you make the right choice:

• Security: Crypto payments are highly secure, so there is no need to worry about data leakage or fraud. They feature advanced data encryption, and no third parties can request payment information and data about transactions. Furthermore, cryptocurrencies provide decentralized payments, so the risks of data theft are minimal.
• Efficiency: Crypto payments are processed rapidly, and this speed gives them a certain advantage over traditional payment methods. While some fiat transactions might take several business days, most cryptocurrency payments are completed within half a couple of minutes.
• Global Accessibility: Payment processing in crypto is a universal method, and it is available globally. Thus, no need to worry about exchange rates and conversion if you have an international business. Moreover, current crypto payment solutions are often multichannel ones, which also contributes to the great accessibility of this service.
• Reduced Costs: It is much cheaper to process crypto transactions than those made in fiat for both merchants and customers. Payers have a fixed fee for each transaction regardless of the sum, while businesses do not need to spend extra on the maintenance of terminals and merchant accounts.
• Attracting New Customers: Payment versatility is also a good option to attract new customers, as you can expand the circle of your loyal clients with those who prefer using crypto for their everyday purchases. Therefore, implementing crypto payment processing in your business is an excellent choice.
• Easy Implementation and Exploitation: Given that integration of crypto payment into your business is easy and quick, it is a no-brainer whether to take advantage of this service. The CatPay company will conduct all the necessary setup and maintenance to ensure that payments in digital currencies are processed quickly and smoothly.

Pitfalls to Be Ready for

Of course, it is not all butterflies and rainbows when it comes to digital currencies; there are several risks that your business should consider.

• Regulatory Uncertainty: As this payment solution is still new and regulated differently in different countries, you might face some compliance challenges, especially if you own an international business. To avoid it, you should analyze the crypto payment rules for your markets of interest.
• Price Volatility: Most tokens are highly volatile, so there are certain risks of revenue decrease due to price change. Volatility should always be taken into consideration, as well as the automatic conversion of your crypto revenue into stable coins or fiat provided by CatPay.
• Technical Complexity: The way digital currencies work is quite complex technically, so to integrate this solution into your business, you should be ready to recruit a third party. It means extra expenses for integration and maintenance.
• Lack of Standardization: While all bank payments are highly standardized regardless of the currency and financial institution, this is not the case with cryptocurrencies. You should be ready to take into consideration all the special features of certain tokens and the way transactions are processed in different blockchains.
• Nascent Infrastructure: Decentralization is a big plus in terms of payment security, but it also comes with some risks. One of them is undeveloped infrastructure for cryptocurrency processing. Thus, it becomes a bit challenging to solve the issues with transactions that have not been completed smoothly.

Should You Accept Crypto Payments?

Most of the time, the answer is yes. However, you should still consider the following factors when making the final decision:

• Payment scalability: If you plan to expand your business to a new market, it is a good idea to offer crypto processing on your website. This way, you can avoid the necessity of integrating payment methods that accept the national currencies of the country you plan to expand to.
• Reliability: Crypto payments are not declined for obscure reasons, as they often are with fiat. Therefore, payments in digital currencies are more reliable.
• Price: Fees are extremely low, so having crypto among payment methods is cost-efficient.
• No chargebacks: With crypto, you can forget about chargeback requests as all payments made with cryptocurrencies are irreversible.

Crypto Payment Processing Made Easy With CatPay

If you would like to integrate a cryptocurrency payment processing system in a seamless and issues-free way, CatPay is the right pick for you. We offer reliable crypto payment solutions that will meet all your expectations! You can benefit from auto conversion, hassle-free reporting, instant fiat settlements, custom checkouts, and flexible fee management with CatPay. Contact us for more information!