How to Choose a Crypto Payments Service Provider
This article will help you make the most important decisions to make and outline the features available from different kinds of options. We'll also help you understand a little jargon as we go along.
The two ways of crypto payments
If you wish to take cryptocurrency on your site, you generally have two choices:
- Crypto lite: If you'd like to accept cryptocurrency for payments however, you're not interested beyond that, this is for you. Look for options which will ensure that you receive the right amount of cash to your bank account as swiftly and easily as is possible.
- Additional information: This category can become complicated very quickly. If you wish to preserve the majority or even the entirety of your crypto cryptocurrency, or accept a larger selection of currencies, or sell NFTs, you'll need more advanced solutions.
The choice between custodial and non-custodial crypto payments service
When it comes to accepting cryptocurrency on your site, the most important decision you'll have to make is whether you'll choose a custodial or non-custodial payments provider.
It's a good idea to make a choice of "crypto light" or "something greater."
Custodial crypto payments providers
A lot of merchants choose this choice offers peace of mind and a familiar user experience. The support you receive is available as well as conditions of service, and you can benefit from additional functions (such such as automated settlements to your bank) because your service provider will manage the crypto accounts for you.
If you are looking to go with "crypto lightweight," custodial crypto payments service providers are your only option.
The benefits of a cryptocurrency payment provider that is custodial include:
- A fully-integrated extension
- The ability to accept any cryptocurrency or cryptocurrencies that are offered by customers
- Directly into your bank account fiat currency
- Account access with an 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 are looking to access more sophisticated features, you might want look into a non-custodial service. With non-custodial solutions they will give you complete control and sole responsibility over your security and the management of your accounts in cryptocurrency. It's not something you should take lightly, but to store owners who are qualified this unlocks the complete potential of crypto.
Benefits of using a non-custodial Crypto payment service:
- Access and control of your cryptocurrency as soon as it's received - no waiting for settlement from the third party.
- There are fewer restrictions on the terms and conditions. No one can suspend or cancel your account or services.
- All actions are subject to applicable laws and your personal capabilities. You can sell whatever you'd you'd like. You can also manage your currency in the way you think fit.
- The sole responsibility lies with your account's security - no hackers or data breaches from third parties can affect your funds.
Crypto vocab check
Fiat money: Currency issued by an official state (e.g. USD, EUR, GBP).
The term "cryptocurrency" refers to Currency secured by digital cryptography (e.g. BTC, ETH, DOGE).
Stablecoin A type of cryptocurrency tied to fiat currencies. (e.g. USDC where USDC = 1 USDC = one USD).
Crypto payment provider features
There are a lot of options to take into consideration when picking between custodial and non-custodial services.
Below, you'll see a full list of features and considerations to illustrate the differences between the options. In using the list, you must be aware that this table is an outline of the features that are feasible. Not all partners will have every feature.
| Feature | Custodial | Non-custodial |
|
A contract with a third party
When you sign up to the service of a business governed by terms of the service. |
Y | N |
|
Account recovery
If you lose access to your account, you may ask for a reset of your password or access account recovery services by contacting the company. |
Y | N |
|
Support
It will be possible to connect and receive support from the provider. |
Y | N |
|
Automatic exchange of stablecoin or other crypto
You may decide to have the crypto transformed into a different cryptocurrency or stablecoin. |
Y | Y |
|
Automatic exchange to fiat
It is possible to opt for the crypto converted automatically to fiat. Be aware that the calculation of exchange rates and rates may differ by the partner. |
Y | N |
|
Automatic settlement of your account to your bank
You may decide to have the funds paid to your bank automatically. |
Y | N |
|
You will receive the exact amount in currency fiat
This reduces the risk of being affected by crypto price fluctuations. Non-custodial solutions can mitigate, but not completely 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. They include features like risk profiling (to assist in ensuring that you don't receive funds from fraudsters) as well as protection from overpayment and underpayment as well as email invoices. |
Y | N |
|
Transaction finalization protection
Blockchains depend on blocks to be created in order to complete transactions. The greater the number of blocks generated following a certain transaction, the more secure that transaction is. Protection helps avoid sending out products and then seeing a transaction be reversed. |
Y | N |
|
Funds insurance
Both custodial and non-custodial solutions carry a risk of hacking. Insurance on funds can safeguard users who use a custodial service. The protection isn't the same for every client and merchants should carefully research their partners' insurance and reimbursement guidelines. |
Y | N |
| Y | Y | |
|
Supports subscriptions/recurring payments
Customers paying with cryptocurrency have to sign off on every transaction. Therefore, recurring payments aren't an option, though some custodial systems offer tools to automatically generate and send invoices based on a schedule. |
N | N |
|
Low transaction fees
Non-custodial and custodial payment companies typically charge significantly less transaction fees (1-1.5%) as compared to traditional payment services (2-3.5 percentage). |
Y | Y |
|
Exposure to crypto network (e.g. gas) fees
Direct cryptocurrency transactions have the network's own fees. for Ethereum this being known as 'gas' charges. Payment processors may absorb the fees, while others pass them on. |
N | Y |
|
Control solely
The only one who can make outgoing transactions through your account. No other entity/person can authorize transactions without access to your private password. |
N | Y |
|
Accept any cryptocurrency on any network
Payment processors that accept crypto support a different range of coins and crypto-based networks. When you use custodial options, you're limited to the currency they accept. Non-custodial solutions can offer a wider range of choices. |
N | Y |
|
integration
It's one thing receiving a payment, it's another to identify which client has made the payment, and to know for the amount of their purchase. Our partners provide comprehensive integrations, ranging from setting up to managing daily. |
Y | Y |
Review your options and choose the right cryptocurrency payments provider for your shop.
It can be difficult to understand the various options available for cryptocurrency, but it's worthwhile to offer the best payment option that meets you and your clients' needs. Make sure you go through the pros and cons of the two types of crypto payments providers, decide which is the right fit for your particular business.