How to Choose a Crypto Payments Provider
This article will help you make the crucial decisions that you'll have to take, and provide an overview of the capabilities available to you from various types of solutions. Plus, we'll demystify some terms along the way.
The two ways of payment in crypto
If you want to accept cryptocurrency on your website there are two choices:
- Crypto lite: If you'd like to use cryptocurrency to pay for your purchases however, you're not interested above that, this option is the right solution for you. It's important to find solutions which will ensure that you receive an appropriate amount of money into your account as quickly and affordably as is possible.
- Something more: This category can get complicated quickly. If you wish to preserve the majority or even the entirety of your crypto digital currency, allow a greater variety of currencies, or even sell NFTs, you'll require more advanced methods.
Choosing between a custodial and non-custodial crypto payment provider
In the event of accepting cryptocurrency on your site the main decision you'll have to make is deciding whether you want to use a custodial or non-custodial payments service.
It's a good idea to make a choice of "crypto lightweight" or "something different."
Providers of custodial crypto payment
A lot of merchants choose this choice gives peace of mind and an easy user experience. The support you receive is available and the terms of service and take advantage of other options (such as automatic settlement to your bank) since your service provider manages the crypto accounts on your behalf.
If you want to pursue "crypto light," custodial crypto payments services are the best choice.
Benefits of Custodial Crypto Payments provider include:
- A fully-integrated extension
- The ability to accept one or more cryptocurrencies from customers
- Payments are sent directly to your bank account fiat currency
- Access to your account via email and password
- Support services
- Low transaction fees and guarantee against chargebacks and refunds
Providers of non-custodial crypto payment services
If you're knowledgeable about cryptocurrency and would like access to more advanced capabilities, you may want look into a non-custodial service. If you choose a non-custodial solution they will give you complete control and sole responsibility over the security and administration of your accounts in cryptocurrency. This isn't something to be taken lightly. However, for qualified store owners this unlocks the complete potential of cryptocurrency.
The advantages of a custodial Crypto payment service:
- Access and control of your cryptocurrency as soon as it's accepted - no waiting for settlement from a third entity.
- Fewer restrictions from terms and conditions - no one can suspend or cancel your account or services.
- The actions you take are only subject to applicable laws and your own capabilities. You can sell whatever you'd like to whoever you'd like and manage your cryptocurrency however you see fit.
- The sole responsibility lies with your account's security . No third-party data breaches or hacks could affect your account funds.
Crypto vocab check
Fiat money: Currency issued by a state (e.g. USD, EUR, GBP).
Cryptocurrency: A currency that is secure by digital cryptography (e.g. BTC, ETH, DOGE).
Stablecoin: A type of cryptocurrency tied to fiat currencies. (e.g. USDC where 1 USDC is 1 USD).
Features of crypto payments providers
There are plenty of features to consider when choosing between the custodial or non-custodial providers.
Below, you'll see an extensive list of options and considerations to illustrate how different options are. In using the table, it's important to be aware that this table is a high-level guide to what's possible. Some partners may not provide every option.
| Feature | Custodial | Non-custodial |
|
A contract with a third entity
Sign up for a service with a corporation which is subject to terms of the service. |
Y | N |
|
Recovery of accounts
If you are unable to access your account, you can request a password reset or access account recovery services from the provider. |
Y | N |
|
Support
You'll be able to access and receive support from the provider. |
Y | N |
|
Automatic exchange to stablecoin/other crypto
It is possible to decide to have the crypto converted to a different crypto or stablecoin. |
Y | Y |
|
Automatic exchange to fiat
It is possible to opt for the crypto converted automatically to fiat. Please note that calculations for exchange rates and rates will vary by the partner. |
Y | N |
|
Automatic settlement of your account to your bank
It is possible to choose to have your funds settled automatically to your bank. |
Y | N |
|
Receive the exact value of fiat currency
This reduces the risk of being affected by crypto price fluctuations. The non-custodial solution can help reduce - but not eliminate - fluctuations by choosing to accept stablecoins. |
Y | N |
|
Features specific to merchants
Some providers offer features to make it easier for merchants to save time and effort. These include things like risk profiling (to ensure your business doesn't get funds from bad actors) as well as protection from overpayment and underpayment and invoicing via email. |
Y | N |
|
Transaction finalization protection
Blockchains rely on 'blocks' being created to finalize transactions. The greater the number of blocks created following a specific transaction, the safer that transaction is. Security helps to avoid the risk of sending items and having the transaction reverse. |
Y | N |
|
Funds insurance
Custodial as well as non-custodial options have a chance of being hacked. Funds insurance can protect users who use a custodial service. But, the protection offered by insurance companies varies and businesses should be aware of their partners' insurance and reimbursement policy. |
Y | N |
| Y | Y | |
|
Supports subscriptions/recurring payments
Users who pay with cryptocurrency will need to authorize every transaction. This means that recurring payments will not be an option, though certain custodial services offer the ability to automatically generate and send invoices based on a schedule. |
N | N |
|
Low transaction costs
Both custodial and non-custodial payment service providers usually offer considerably lower transaction charges (1-1.5 percent) that traditional providers (2-3.5%). |
Y | Y |
|
Exposure to crypto network (e.g. gas) fees
Direct cryptocurrency transactions come with the network's own fees. with Ethereum being the most popular, they are referred to as 'gas' charges. Certain payment processors pay the fees, while others pass these fees on to the user. |
N | Y |
|
Control solely
The only one who can make outgoing transactions from your account. No other entity/person can authorize transactions unless they gain access to your personal key. |
N | Y |
|
Accept all cryptocurrency, on any network
The processors for crypto payments offer a variety of cryptocurrency networks and currencies. Custodial services are restricted by the currencies they can support. Alternative solutions that aren't custodial can provide a greater options. |
N | Y |
|
integration
It's one thing to receive a payment, it's another to determine which person made the payment and for what purchase. Our partners offer robust integrations covering everything from configuration to daily management. |
Y | Y |
Review your options and choose the right cryptocurrency payments provider for your shop.
Cryptocurrency solutions can seem confusing It's worth the effort to provide payment options that best suit the needs of your customers and needs. Make sure you go through the advantages and disadvantages between the two kinds of crypto payments providers, then consider which specific provider is the right fit for your particular business.