In recent years, businesses have gained an appreciation for cryptocurrencies and begun to integrate crypto payment as one of their payment options. With this rise in digital currency exchanges comes the question of how to select the best digital currency payment gateway for workflow integration. In this article, together with XAIGATE, let’s discuss in details the topics of what a digital currency payment gateway is, what is its pros and cons, and how to select for the best one on the market in 2024.
What is a digital currency payment gateway?
Digital currency
Firstly, let’s go over the background information on digital currency before we discuss its payment gateway. Digital currency is a form of currency that is available only in digital or electronic form, which is different that traditionally-used fiat currencies. Digital currency is also called digital money, electronic money, electronic currency, cybercash, or, most commonly known, cryptocurrency or crypto.
Different than physical currencies which we are used to, such as banknotes and minted coins, digital currencies do not have physical attributes. Transactions involving digital currencies are made using computers or online electronic wallets.
Digital currency payment gateway
After learning about digital currencies, or cryptocurrencies, we have discussed that they are different than traditional fiat currencies. Therefore, in order to exchange digital currencies, users have to use crypto wallets or a digital currency payment gateway. A digital currency payment gateway, different than self-managed crypto wallets, is a gateway service that acts as a bridge between merchants (business and eCommerce shop owners) and consumers paying their goods and services with cryptocurrencies.
A digital currency payment gateway, or also called crypto payment gateway, accepts crypto payments from consumers, confirms, verifies, and settles these into merchants’ wallets in the form of crypto or fiat currencies.
Learn more about crypto payment gateways in more details: What is crypto payment gateway: A comprehensive guide
How does a digital currency payment gateway work?
There are several digital currency payment gateways on the market, and they all have unique features to set themselves apart from competitors. However, most crypto payment gateways follow somewhat a similar workflow.
- Payment gateway integration: When businesses opt to accept digital currencies as a payment method, they most often opt for a payment gateway service and integrate it into their checkout page in the business workflow.
- Customers choose to pay using crypto: When customers choose crypto as their payment method of choice, they select crypto on the checkout page and pay equivalent values for services/goods in digital currencies.
- Crypto payment gateway accepts and verifies payments: The crypto payment gateway securely accepts and verifies crypto payments from customers.
- Blockchain network validation: The payments are then sent to a blockchain network for further validation, and both the merchants and customers are notified if the payments go through or not.
- Funds are deposited: The crypto payment gateway service deposits funds into merchants’ wallets in the form of either crypto or fiat currencies.
You might be interested in: Top 3 leading payment processors for cryptocurrencies in 2024
Fees associated with a digital currency payment gateway
Since crypto payment gateways are third-party service providers, there are certain fees associated with using such a service to process crypto payments. These fees include:
- Network Fees: Crypto payments from consumers go through the validation step before being settled into merchants’ wallets using a blockchain network, and these come with a fee that is charged to users.
- Gateway fees: Since payment gateway service takes the risk for merchants and accept crypto payments as well as manages and settles funds, additional service fees may apply so they can continue running their gateway service.
- Wallet fees: Some crypto wallets may charge fees for transactions or for converting digital currency to another crypto of choice.
Pros and Cons of using a digital currency payment gateway
Pros
There are many advantages to using a crypto payment gateway service instead of accepting crypto directly into one’s wallet and managing it themselves. These pros include:
- Reduced volatility risks: Digital currencies have perceived volatility risks since they don’t have tangible and physical attributes like fiat currencies. Therefore, using a crypto payment gateway that pays you at market value when the transaction occurs takes out the risk of crypto changing its value while waiting for the transactions to clear and settle.
- Simplified transactions: A digital currency payment gateway enables you, as merchants, to seamless integrate the crypto payment option into your ecommerce or business websites as well as your customers to pay in crypto in a seamless and convenient manner. A gateway takes away the stress of managing, verifying, and converting crypto on your own.
- No necessity of understanding how crypto ecosystem works: Because a crypto payment gateway service takes care of all the processing of the crypto payments, merchants don’t necessarily have to have much expert knowledge on crypto and the crypto ecosystem.
- Global acceptance: A digital currency payment gateway allows merchants to reach global customer pool by accepting a wide range of cryptocurrencies and from people all around the world.
Cons
- Commission fees: As discussed in the fees section above, there are commission fees associated with using these services.
- Reliance on the Provider: You, as the merchants, depend on the gateway provider to maintain consistent service so you can operate your business smoothly and without disruption. So, it is important to select for the best provider when deciding which one you want to integrate into your workflow.
- Security Risks: As with any payment gateway, a digital currency payment gateway could be hacked and you run the risks of losing your funds that are waiting to be processed should this situation arises.
How to select for the best digital currency payment gateway
Now that we have discussed the pros and cons of using a gateway service, if you have decided to go ahead and integrate one into your business workflow, how would you select for the best service? There are many factors to keep in mind when picking your service of choice:
- Multiple cryptocurrencies accepted: In order to reach a wide customer pool, it’s important to choose a service that accepts and processes multiple cryptocurrencies.
- Transaction and processing speed: Not all gateways process payments at the same speed, so make sure to choose one with swift transaction times to provide the best customer experience.
- Fees: If you want to expand your business without increasing the overhead cost too much, it’s crucial to select for a service with low fees.
- Security: Security is always on everyone’s top priority when selecting for any payment gateway, not just digital gateways. Therefore, you should do thorough research into the service’s safety measurements and preventive measures to make sure all transactions are free from fraudulent activities.
- Customer service support: In case problems arise during integration process or while you are using the service, having a responsive customer service support team is important to make sure you can run your business smoothly.
XAIGATE: the best digital currency payment gateway
If you are in the market for an affordable yet secure and fast digital currency payment gateway, XAIGATE is your ideal option for global expansion. We offer a reliable crypto payment gateway service for global sales with extra features at an affordable fee! Some of our outstanding features include:
- Low processing fees: Our fee is competitive at 0.2%
- No monthly maintenance cost
- Easy setup: User-friendly UX/UI, can integrate with online platforms such as WooCommerce and Shopify
- Invoice services: XAIGATE assist clients with requesting payments and processing them through our blockchain API.
- Global payments: We accept crypto payments from all over the world and can process multiple different types of cryptocurrency.
Reach out to us today and we are always happy to answer any questions you may have. Our team is dedicated to assisting you every step of the way on your journey to bringing your business to the next level!
