Cryptocurrency has totally revolutionised and disrupted traditional financial set up. Apart from investment and trading, you can also use crypto coins for making payments. As digital currency is gaining more popularity and adoption, it is being increasingly accepted by businesses globally.
According to a report by Deloitte, 75% of global businesses are set to accept crypto coins as payments within a couple of years. While making payments via cryptos, you can either opt for the manual transaction method or use any of the payment gateways.
If you are new to the world of digital currencies and interested to know more about this newest way of payment, check out the sections below.
Crypto Payments: A Basic Rundown
Crypto payment is basically transferring funds in the form of digital coins or cryptocurrencies from your wallet to another. As mentioned, you can do it manually with the help of the public address of the recipient.
Payments made via digital currencies are a faster, cheaper and safer way of transacting funds. You do not need to use fiat currencies and the fund transfers are protected with cryptography technology.
So, now you can pay back a friend or buy an item using digital currency with the help of a payment method that is based on blockchain technology.
To carry out fund transfer, you will require the following things:
- A Crypto Wallet
This is a virtual wallet to store all your digital currencies. You can opt for any kind of crypto wallet depending on your preference. Each type of crypto wallet comes with specific features and benefits.
- Your Private Key
The private key is your password to access the crypto wallet. You cannot initiate any transaction without this. Do make sure to keep it safe and secure as anybody with the knowledge of your private keys can use your cryptos from the wallet.
Crypto Payment Gateways: What Is it and How Does it Work?
Manual crypto payment transfer requires you to use the public address of the one who would receive the funds. You have to copy the address to send funds. But it is usually not as simple as it might sound. One can end up sending cryptos to wrong address or choose an incorrect blockchain network. Such mistakes can lead to a loss of funds that can be irreversible.
On the other hand, to make the transaction process smooth, many crypto payment gateways have come up. These payment processors help to manage your wallet and conduct the transaction between customers and merchants in an error-free and efficient way.
There are many crypto payment gateways and the way they work might differ. But these are the basic steps in which a crypto transaction takes place via such gateways:
- Let’s say you as a customer have decided to pay for a service or a purchased good.
- The merchant, who would be the recipient of the payment, will set up a digital invoice on a payment gateway. The invoice is generally a QR code that will have the merchant’s crypto wallet address along with the amount required to be paid.
- You will then have to scan that QR code and then confirm the payment.
- The digital coin will be transferred from your wallet to the merchant’s digital wallet or account.
All this takes place within a few minutes and the process is totally hassle-free, convenient and faster as compared to manual payment process.
Payment with Crypto Cards
Now, you can also use crypto cards to make payments! Yes, that’s right. These cards are just like your traditional debit and credit cards, albeit they are virtual cards and are linked to your crypto wallet.
For using a crypto card, you will have to first link it with your crypto wallet. You can use it to pay for any goods or services and the required amount will be removed from your wallet, transferred to local currency and deposited to the merchant’s account or wallet in their preferred currency or coin.
Crypto Payment: Benefits and Drawbacks
Compared to traditional currency, payments with cryptocurrency come with various advantages. Some of these are as follows:
- Crypto payments are global. You can easily use digital coins to send or receive payments from any part of the world.
- One of the most significant features of cryptocurrencies is that they are totally decentralised. In other words, your payments are free from the control or influence of governments or central banking authorities.
- These payments are fast and secure. The transactions are verified by nodes and then registered on blockchains. This makes the transactions totally irreversible and safe.
- Also, crypto payment transactions are entirely anonymous.
Despite these advantages, there are some major drawbacks of crypto payments. These are:
- Crypto payment is relatively new and there is still much gap in understanding how it works. This can lead to payment-related issues, confusion and misunderstanding.
- Since digital currencies are not under the supervision of any governing body, there is little protection both for customers and businesses in case of any discrepancy or errors.
- As cryptocurrencies are speculative in nature, their values can face regular fluctuations. This could mean that prices of any goods or services that you buy with digital currencies can change rapidly.
- If you are using a payment gateway, you have to pay an additional charge as processing fee.
Over the years, the global financial system has significantly evolved. Payment via cryptocurrencies is the latest addition to the long list of payment methods that you can use today. There are various ways in which you can use cryptos for fund transfers or for paying for products and services. Crypto payments are fast, hassle-free, secure and smooth.
With more and more businesses accepting digital currencies as payment options, crypto payment will only become more popular in the coming years.