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And why are crypto payments still unable to compete with bank payments?
The “Mind” has already written about Ukraine’s first cryptocurrency card and how it works. But this is not the only way that allows you to pay for goods and services with digital assets instead of fiat money. Many Ukrainian stores implement online payment in cryptocurrency for their goods. Among them are the Foxtrot and Varus retail chains, the Rechi.ua online store, the Okwine wine market, and the “Tabletochki” charity fund.
Moreover, everything looks quite familiar to the buyer. They choose the desired product but only specify cryptocurrency as a payment method, not a Visa or ApplePay card. The seller processes the payment receives the required amount and confirms the purchase.
You can learn how to use your crypto wallets here bit 360 ai
Mind figured out how cryptoprocessing works and how convenient and safe it is.
What is cryptoprocessing? Many people are familiar with such a concept as bank processing. Simply put, it is the processing of non-cash payments made by the buyer/client in favour of the seller using a bank card.
The cardholder wants to pay for the product in a store or online. For this, they can use the POS terminal that is physically installed at the point of sale, or enter the card details on the seller’s website, if it is an online payment.
Before reaching the seller, the payment undergoes verification, in which several links participate. This is the bank that issued the payment card (the issuer), the bank that services the seller’s accounts (the acquirer), as well as the processing center that ensures the security and continuity of payments; that is, it is responsible for the technical part.
Cryptocurrency processing works according to a similar scheme. Except there are no banks in this chain. The buyer wants to pay for the purchase, and the processing platform that handles the transaction accepts the payment request debits the money from the buyer’s crypto wallet, and transfers the funds to the seller.
Why is a cryptoprocessing platform needed? First, the buyer cannot send the payment directly to the seller. Rather, it is theoretically possible if the seller places the details of the digital wallet on his website. And buyers will transfer money for each purchased product.
But, firstly, it is inconvenient: with a large volume of sales, payments can simply get confused. Secondly, with this approach, it is impossible to integrate the payment system with accounting, accounting, logistics, etc.
Why is a cryptoprocessing platform needed? The buyer cannot send the payment directly to the seller. Rather, it is theoretically possible if the seller places the details of the digital wallet on his website. And buyers will transfer money for each purchased product.
But, firstly, it is inconvenient: with a large volume of sales, payments can simply get confused. Secondly, with this approach, it is impossible to integrate the payment system with accounting, accounting, logistics, etc.
How to connect to cryptoprocessing? There are quite a several platforms involved in processing payments in digital assets. Conventionally, such services can be divided into two groups:
Platforms owned or related to cryptocurrency exchanges. For example, it is BinancePay (Binance exchange) or Whitepay (WhiteBit exchange).
Third-party solutions from independent developers – Cryptomus, Coingate, Any.Money, etc.
At the same time, the crypto processing connection mechanism and its integration are the same plus or minus everywhere.
The seller registers on the processing platform and receives a merchant account.
When the account is created, the seller has access to the application code (API).
This API needs to be integrated into the online store as a payment form.
After that, the buyer can choose cryptocurrency as a payment method when placing an order.
The seller, for his part, sees all the amounts received and can further dispose of the money (for example, withdraw it to cash).
Importantly, payment can be accepted in two formats.
The first is the conversion of cryptocurrency into regular fiat currency. For example, if the buyer sends USDT, the seller receives hryvnias. The conversion occurs at the exchange rate to which the processing platform is linked, or some average rate is taken. As noted by some crypto-processing sites, this is “…the course of the leading world exchanges”.
The second format is cryptocurrency transfer. In this option, the seller receives the same cryptocurrency with which the buyer paid. Or another cryptocurrency after converting the currency in which the payment was initially nominated. Let’s say the outgoing payment is in USDT, and the incoming payment is in BTC. However, it will still be a digital asset, not a fiat.
How to pay with cryptocurrency? For the buyer, the process is quite simple and does not differ in particular from paying by bank card.
The buyer finds the desired product in the online store and puts it in the basket.
Then, when placing an order, he chooses to pay in cryptocurrency.
At the final stage, the buyer receives an invoice for payment in the form of a QR code.
The code must be scanned to receive a unique address to transfer the desired amount.
The amount is automatically debited from the crypto wallet or the buyer sends the payment manually.
The seller physically receives the payment in his account after 15-20 minutes. This is the time required for the processing to process the transaction, send it to the blockchain and register the confirmation from the blockchain nodes. After all, as we remember, cryptocurrencies are a decentralized system. That is, each payment is like a puzzle that is assembled from pieces.
The commission charged by cryptoprocessing for processing is paid by the seller. It is from 0.1 to 1% of the payment amount.
Nuances and disadvantages of crypto-payments. Since all operations related to payments with cryptocurrencies are still in their infancy, such payments are imperfect and have disadvantages for both sellers and buyers:
Lack of a clear legal field. Cryptocurrencies in Ukraine are still not properly regulated at the level of legislation. Therefore, in case of any disputed situations related to payment in digital assets, it will be extremely difficult to resolve them, mainly through court.
Dependence on cryptoprocessing. The reliability and continuity of payments are directly tied to the platform that provides the processing. If something happens to it (technical failure, fraud, hacking), it is almost impossible to return the money that has been frozen or lost.
Conversion risks. The cryptocurrency market is very volatile, and the price of Bitcoin can change by several percent in a matter of minutes. Therefore, so that the buyer does not overpay for the product and the seller receives exactly what he expected, cryptoprocessing must fix the exchange rate at the time of payment. This is especially important if the buyer sends cryptocurrency and the seller receives fiat. As soon as a payment processing request is received, the service freezes the course for some time, usually 15-20 minutes. It is enough for the buyer to make the payment. Each operation can be tracked with 360 ai bitcoin
Lack of a universal payment format. The payment mechanism for bank cards has long been worked out. The buyer enters details, and the amount is automatically debited from the account. With cryptocurrencies, not everything is so obvious. For example, if the seller uses crypto-processing of one of the exchanges, then the buyer needs a wallet opened on this exchange for payment. Otherwise, he will have to ask the seller for a direct payment link to send the money.
Therefore, crypto-payments do not yet have the seamlessness that is characteristic of banking operations. But on the other hand, cryptocurrency can already be used not only for speculation but also for payment. And the more actively such payment services develop, the more convenient they will become. It just takes time.
You may also like: Ways To Reduce Your Cryptocurrency Taxes
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