What is the best way to choose a crypto Payments Service
This article will guide you through some of the crucial decisions that you'll have to take and explain the features available from different kinds of options. In addition, we'll help to decode a little jargon along the way.
Understanding the two approaches of cryptocurrency payments
If you are looking to allow cryptocurrency on your site There are generally two choices:
- Crypto lite: If you'd like to accept cryptocurrency for payments however, you're not interested above that, this option is for you. It's important to find solutions which will ensure that you receive the correct amount of money to your bank account as quickly and affordably as is possible.
- Something more: This category can get complicated quickly. If you want to keep some or all your cryptocurrency as cryptocurrency, or accept a larger variety of currencies, or even sell NFTs, you'll require sophisticated solutions.
Choosing between a custodial and non-custodial crypto payments provider
When it comes to accepting cryptocurrency payments on your site the main option you'll be faced with is deciding whether you want to use either a custodial or non-custodial payment provider.
This is in conjunction with your choice of "crypto light" or "something greater."
Payments providers that use custodial crypto
Many merchants find this choice provides peace of mind as well as an easy user experience. The support you receive is available and terms of service, and take advantage of more functions (such the automatic settlement of your bank) because your service provider will manage your accounts in crypto on your behalf.
If you want to pursue "crypto lightweight," custodial crypto payments service providers are your only option.
The benefits of a custodial crypto payments providers comprise:
- A fully-integrated extension
- The ability to accept the use of one or more cryptocurrency from customers
- Settlements sent directly into your bank account fiat money.
- Account access via an email and password
- Support Services
- Lower transaction costs and security from chargebacks and refunds
Crypto payment providers that are not custodial
If you're knowledgeable about cryptocurrency and would like access to more advanced capabilities, it's possible to think about a non-custodial option. With non-custodial solutions you'll be in complete control , and the sole obligation to the security and management of your cryptocurrency accounts. This is not something to take lightly, but when you're a store owner with a valid license this unlocks the complete potential of cryptocurrency.
The advantages of a custodial Crypto payment service:
- You can access and manage your crypto immediately after you receive it - there's no need to wait to be settled by an outside entity.
- There are fewer restrictions on terms and conditions - no person can cancel or suspend your account or services.
- All actions are subject to the laws in force and the capabilities of your individual. It is possible to sell what you'd like to whoever you'd like. You can also manage your crypto currency however you feel best.
- All responsibility is your account's security . No third-party data breaches or hacks can affect your funds.
Crypto vocab check
Fiat Currency: Currency issued by the state (e.g. USD, EUR, GBP).
Currency: The currency is secured with cryptographic principles (e.g. BTC, ETH, DOGE).
Stablecoin: The type of crypto tied to fiat currencies. (e.g. USDC (where 1 USDC is one USD).
Features of crypto payments providers
There are a lot of options to consider when choosing between the custodial or non-custodial providers.
Below is an extensive list of options and considerations to illustrate the differences between the options. When using the table, it's important to be aware that this table is a high-level guide to what's possible. Not all partners will provide every option.
| Feature | Custodial | Non-custodial |
|
Contract with a third party
Sign up for the service of a business which is subject to terms of service. |
Y | N |
|
Account recovery
If you lose access to your account, you may ask for a reset of your password or access recovery through the service provider. |
Y | N |
|
Support
It will be possible to connect and seek assistance from the provider. |
Y | N |
|
Automatic exchange of stablecoin or other crypto
You may opt to have your crypto transformed into a different cryptocurrency or stablecoin. |
Y | Y |
|
Automatic exchange to fiat
You may choose to have the crypto converted automatically to fiat. Note that exchange rate calculations and rates can differ depending on your partner. |
Y | N |
|
Automatic settlement to your bank
You can decide to have the funds be automatically transferred to your bank. |
Y | N |
|
You will receive the exact amount in currency fiat
This helps avoid exposure to crypto price fluctuations. Non-custodial solutions can mitigate - but not eliminate - the volatility of cryptos by deciding to allow stablecoins. |
Y | N |
|
Merchant-specific features
Some providers offer features to make it easier for merchants to save time and effort. These include things like risk profiling (to help make sure you do not receive money from criminals) as well as protection from overpayment and underpayment as well as email invoices. |
Y | N |
|
Transaction finalization protection
Blockchains depend on blocks being created to complete transactions. The greater the number of blocks produced after a particular transactions, the more secure the transaction. The protection helps prevent sending out goods and then having a transaction be reversed. |
Y | N |
|
Funds insurance
All custodial or non-custodial solutions have a chance of being hacked. Funds insurance can protect those using a custodial solution. However, protection varies widely and businesses should be aware of partners' insurance and refund guidelines. |
Y | N |
| Y | Y | |
|
Supports subscriptions/recurring payments
Users who pay with cryptocurrency will need to authorize every payment. Therefore, recurring payments aren't possible, but some custodial solutions offer tools that automatically create and mail invoices based on a schedule. |
N | N |
|
Low transaction costs
Both custodial and non-custodial payment providers typically offer significantly lower transaction charges (1-1.5 percent) that traditional providers (2-3.5%). |
Y | Y |
|
The exposure to crypto network (e.g. gas) fees
Direct cryptocurrency transactions come with their own network fees - with Ethereum being the most popular, they are referred to as 'gas' charges. Some payment processors absorb these fees; some pass the costs on. |
N | Y |
|
Sole control
The only one that can authorize transactions from your account. Any other person or entity cannot authorize transactions unless they gain access to your personal key. |
N | Y |
|
Accept all cryptocurrency across any network
Payment processors that accept crypto offer a variety of crypto networks and coins. Custodial services are limited to the currency they accept. Non-custodial solutions can offer a greater alternatives. |
N | Y |
|
integration
It's one thing receiving a payment, it's another to determine which person has made the payment, and to know for the amount of their payment. Our partners provide robust integrations covering everything from setup to day-to-day management. |
Y | Y |
Examine your options and select the best cryptocurrency payment provider for your store
It can be difficult to understand the various options available for cryptocurrency It's worthwhile to offer the best payment option that meets you and your clients' needs. Take the time to navigate through the pros and cons of the two types of crypto payments providers, take note of which one will best suit your business.