Crypto Payment Gateway Solution: Conceptual Approaches

In this article we are going to address several conceptual approaches to crypto payment gateway solution implementation. Blockchain payment processing is only possible through partnership with a cryptocurrency payment gateway provider. The format of this partnership should suit your business model. So, let us consider the technical options, allowing a business to accept crypto payments online and/or through a POS.

An In-house Crypto Payment Gateway Solution Built from Scratch

If you want to control and customize the process from the very start, this option is for you. However, keep in mind that it is the most costly of available options, involving lots of requirements and liability. You need to develop special logic for supporting smart contracts, transactions processing on blockchain, and, of course, cryptocurrency payment method. On the bright side, you won’t have to pay gateway and transaction processing fees.

Pros

  1. You become a crypto payment processor in your own right, controlling all the processes, from payment acceptance to merchant funding.
  2. You can underwrite merchants representing any type of business (MCC), that want to accept crypto as payment method. For this purpose, you have to build your solution accordingly.
  3. As we have already mentioned, you are saving on transaction and gateway fees.

Cons

  1. You are facing huge upfront costs. Development of a custom solution requires considerable time (6-18 months) and funding volumes ($150K or more).
  2. You are liable for any potential smart-contract breaches.
  3. If you want to accept credit card and crypto, as well as other payment types, you require some additional solution.

Crypto Payment Gateway Solution Off-the-shelf

This option is chosen by multiple companies wondering how to accept crypto payments in the most efficient way. Examples of crypto payment gateways are quite numerous: CoinsBank, Coingate, Coinpayments, Shopify Gateway are just few of them.

So, let us assume, you settle on a third-party crypto payment solution. Well, in this case, the good news is you do not have to develop all the logic from scratch. Instead, you integrate with an existing crypto payment gateway using its special API. After the integration you get access to a fully functional blockchain payment system. Of course, the costs are much lower than in the case of a custom solution development. However, you delegate most of the process to the provider and have to pay per-transaction (and gateway) fees.

Pros

  1. Setup and integration take relatively short time (up to several weeks, if everything goes as planned).
  2. Upfront costs are low, as development efforts are relatively small, and coordinated with the provider.
  3. The level of liability for potential smart contract exploits is also low. Most of the liability is assumed by the third party. However, if you choose an open source crypto payment gateway option, you might have to certify all the future adjustments. Usually, the more adjustments you introduce, the greater liability you assume.

Cons

  1. If you choose a classical third-party solution, then your control over the payments and merchant lifecycle is very limited. Both in terms of payment types (crypto-only) and MCCs supported by the provider.
  2. As we’ve mentioned above, you have to pay per-transaction and gateway fees. They mostly depend on the terms of your specific agreement with the third party.
  3. Again, if you need to support non-crypto payments, you have to look for additional payment solutions.

Crypto Payment Gateway Within an Omni-channel Solution

Although, not as widely used as solely cryptocurrency payment gateways, an omni-channel solution is the most flexible one.

There are not yet that many omni-channel crypto friendly payment gateway solutions available at the market. However, the majority of present-day businesses is not ready to switch to cryptocurrency payment method completely. They still need to support credit/debit cards, direct debit, or digital wallets such as GooglePay, ApplePay, and PayPal.

Unless you want to build it from scratch, an omni-channel solution is, usually, a third-party offering. So, you will have to integrate your platform with it through its special API. After the integration you will be able to accept all payment methods (including crypto, of course).

Pros

  1. A single integration with a crypto friendly omni-channel platform allows you to accept all target payment methods.
  2. The cost of integration with a ready-made third-party solution is much lower than the cost of developing a custom solution from scratch.
  3. Unless you are taking the solution in-house for further customization, most of the liability lies on the provider. First and foremost, this concerns smart contract violations and system hacks. If you assume more control, you assume more liability.

Cons

  1. Unless you are licensing the solution as an open source gateway software product, you have limited control over the process. Particularly, over payment logic and merchant underwriting. While the provider supports all your target payment types, it might not support some of your target MCCs.
  2. You still have to pay-transaction and gateway fees, depending on payment methods, and specific processing terms.
  3. You depend on a single omni-channel payment gateway partner for all payment methods and MCCs. So, it should be a trustworthy partner.

Concluding remarks

We feel, that a crypto payment gateway solution works best if it is a part of an omni-channel solution. True, omni-channel solutions have their flaws and risks associated with them. However, they support all payment methods, including crypto, “under one roof”. So, they allow you to service merchants that want to stick to more conventional payment forms for a while.

United Thinkers is now in the process of adding crypto payment gateway functionality to its UniPay Gateway solution. Our improved payment solution is targeted at merchants, PayFacs, and software providers. So, you are welcome to contact us and learn how our updated omni-channel payment technology can work for your business model.

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