With the growing acceptance of cryptocurrencies as a common mode of payment, businesses have been making necessary changes to their payment processing systems. The most efficient way of doing so is through a crypto-to-fiat payment gateway.
This payment solution enables merchants to accept crypto payments, making it easy for them to cater to a customer’s preferred payment method.
However, due to its novel approach, many continue to wonder: How does it work? Is it safe? And more importantly, is it suitable for my business?
In this article, we break down everything you need to know about crypto-to-fiat payment gateways – the process, the pros, and how you can incorporate it into your business.
Crypto-to-fiat payment gateways offer a straightforward solution for businesses to accept crypto payments from customers. Once payment is processed, merchants can convert them to their chosen fiat currency to be credited to their bank accounts.
This system is suitable for merchants who would like to cater to more customers and their payment preferences, albeit without having to enter the cryptocurrency market themselves.
Alternatively, some merchants may use their personal wallets to accept digital currencies. However, the advantage of a crypto-to-fiat payment gateway is an overall more simple and more efficient process.
Before the rise of cryptocurrencies and other digital currencies, a fiat payment gateway was the norm in payment processing. It accepts payments in national fiat currencies like USD, AUD, Euro, and the like. This payment system works for various online transaction modes like credit cards, debit cards, internet banking, UPI (Unified Payment Interface), and digital wallets.
As for how it works, fiat-to-fiat gateways involve multiple intermediaries to complete the payment process. These include the customer or cardholder, the store, the issuing bank, and the acquiring bank.
Once the transaction is made, they rely on the customer’s bank card details to approve or reject payments. They go through steps of verification of bank details, authorization requests, processing, and other protocols to ensure a safe and legitimate transaction.
So how do they compare to a crypto-to-fiat payment gateway? Here are some notable differences to keep in mind.
|Crypto-to-Fiat Gateway||Fiat-to-Fiat Gateway|
|Payments accepted||Crypto, fiat||Fiat only|
|Settlement period||1 second to 10 days||1 second to 14 days|
|Mediators involved||One||At least three|
|Fees||Low fees||High fees|
|Chargeback fraud protection||Limited to no risk of chargebacks||Significant risk of chargebacks|
Unlike fiat-to-fiat payment gateways, crypto-to-fiat gateways involve only two parties. These are the terms to take note of:
The providers are the ones who take on the risk of processing crypto payments through their own wallets. From here, the providers facilitate the transaction and transfer between businesses and their customers.
In effect, merchants can rest assured of secure, smooth transactions without risk or effort on their end. Here’s how it works:
All payment processing systems, including crypto payment gateways, will involve fees for the parties involved. These include:
Payment providers incur fees from the transaction validators or miners who verify blocks and transactions in the cryptocurrency network. This fee is meant to cover their energy use and computational power.
Seeing as payment providers use their own wallets to facilitate transactions, they technically incur these operational fees. However, in most cases, they transfer these fees to the merchant for using their system.
In turn, merchants typically charge customers an additional service fee to keep the payment gateway system operational long-term.
This is a common question among merchants, especially those who are not familiar with cryptocurrencies or have reservations about this new mode of payment.
The good news is that crypto-to-fiat payment gateways generally ensure secure transactions — that is if supplied by a legitimate gateway provider or service provider.
As such, it is the merchant’s responsibility to do their due diligence in choosing the best provider for their business and financial transactions. When researching options, some factors to consider are:
All that said, if you are considering a crypto-to-fiat payment gateway for your business, below is a summary of its pros and cons to guide you through your decision.
Considering these cons, it is crucial for merchants to choose a legitimate, secure, and experienced crypto-to-fiat payment gateway for their business.
If you are in the process of exploring your options, make sure to do thorough research, browse through reviews from fellow merchants, and contact the providers for a more in-depth understanding of their crypto payment gateway systems.
Here at Shark Processing, our crypto-to-fiat payment gateway promises the following benefits for merchants:
Contact us today, and we’ll be happy to assist you with any questions or concerns.
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