Crypto Payment Gateways and how they work

Bridge2pay will explain – Crypto Payment – The adoption of cryptocurrencies has increased dramatically in recent years. The sheer volume of national and international brands that now provide their clients with crypto payment choices is proof of this. For instance, major companies like Starbucks, Balenciaga, Tag Heuer, Microsoft, etc. have all begun to accept cryptocurrency payments in the past year or two. The crypto payment gateway is a crucial piece of technology that makes this feasible. Learn more about these payment facilitators in this article, including how they operate and their advantages and disadvantages.

What are crypto payment gateways and how do they work?

A tool called a crypto payment gateway enables businesses to accept payments made in cryptocurrencies like Bitcoin and Ethereum. These gateways serve as a middleman between the seller and the buyer. They enable businesses to accept cryptocurrency payments even without a cryptocurrency wallet. They also make sure that merchants don’t have to go through any difficult conversions. Like with any other kind of payment, the money is simply transferred into their account.

When a customer wishes to make a bitcoin purchase, they start the transaction by transferring the money to an exclusive address created by the cryptocurrency payment gateway. The gateway then confirms the transaction and exchanges the cryptocurrency for the selected fiat currency of the business. The fiat money is then deposited into the merchant’s bank account.

The ability to conduct borderless, almost instantaneous transactions is one of the main advantages of crypto payment gateways. As a result, businesses can accept payments from clients located in many nations without incurring extra costs for currency conversion or foreign bank transfers.

On-chain and off-chain payment gateways

On-chain payment gateways conduct transactions on the blockchain, as the name might imply. As a result, the transaction information is added to the blockchain’s open ledger. Transparency and immutability of transactions are made possible by this, but the transactions may also be more expensive in terms of costs and take longer to confirm.

On the other hand, off-chain payment gateways carry out transactions away from the blockchain. Transparency and immutability offered by on-chain transactions are sacrificed in favor of quicker and less expensive transactions.

Some popular crypto payment gateways

BitPay: This is one of the most popular crypto payment gateways available today. It supports multiple cryptocurrencies and allows merchants to receive payments in USD or EUR.

Coin Payments: This payment gateway supports over 1,800 different cryptocurrencies and allows merchants to receive payments in over 100 different fiat currencies.

GoCoin: This is a cryptocurrency payment processor that accepts payments in USD, EUR, and GBP as well as multiple cryptocurrencies.

Other well-known businesses that provide cryptocurrency payment gateways include Coinbase, Shopify, Alfa Coins, and more.

The benefits of crypto payment gateways

Borderless Transactions: Due to the near-instant and borderless nature of crypto payment gateways, businesses may accept payments from clients in many nations without incurring extra costs for currency conversion or foreign bank transfers.

Low transaction fees: Compared to conventional payment methods, transactions performed using crypto payment gateways typically have cheaper transaction fees.

Security Measures: Security is a major concern when it comes to crypto payment gateways, as it is with any online transaction. Crypto payment gateways use a number of security precautions, including SSL encryption, two-factor authentication, and offline wallets to store funds, to guarantee the security of transactions.

Access to a larger market: Through the usage of bitcoin payment gateways, businesses can reach a growing population of cryptocurrency users, which may boost sales.

Fewer intermediaries involved: The only middleman in the transaction is the bitcoin payment gateway. Fiat payments, on the other hand, include the banks of the sender, recipient, and payment channel. The likelihood of things going wrong rises as a result.

Anonymity: A degree of anonymity is provided via crypto payment gateways, which may be advantageous for some customers who prefer privacy.

Disadvantages of Crypto Payment Gateways:

Volatility: Because of the volatility of cryptocurrencies, it is challenging for businesses to forecast their revenue because the value of a transaction can varies considerably in a short amount of time.

Lack of regulation: Because the cryptocurrency market is still mostly unregulated, it can be problematic for businesses and customers who worry about fraud or hacking.

Limited acceptance: Customers may have few options for making purchases because not all retailers and internet platforms accept cryptocurrency payments.

Complexity: The integration of the crypto payment gateway might be a challenging operation that calls for technical knowledge.

Lack of protection for consumers: Due to the irreversibility and anonymity of transactions made using crypto payment gateways, consumers may only have minimal protection in the event of fraud or disagreements.

How blockchain might be the answer to retail theft

Retail theft is a serious pain in the flesh for physical store owners. Retail theft is thought to cost the US alone $700,000 for every $1 billion in sales income each year. According to information from the National Retail Federation’s (NRF) Organised Retail Crime Survey, this equated to losses of $94.5 billion in 2021.

Numerous people and organizations have made numerous attempts throughout the years to address this problem, but without much success. But thanks to Lowe’s, that might soon alter. To deal the crucial blow to retail criminals, the American home improvement juggernaut is working on a system that blends blockchain and other cutting-edge technologies. This retail theft prevention system, called “Project Unlock” by Lowe’s, may have enormous future potential.

But what is Project Unlock and how does it work? Tag along to find out.

Project Unlock — What is it?

Retail store owners have long relied on conventional methods, such as strong lock and key mechanisms, to deter shoplifters from taking their merchandise. But according to experts, this strategy frequently turns away customers and finally results in lower sales. Furthermore, statistics show that these approaches haven’t been very successful.

With this in mind, Lowe’s Companies Inc. has chosen to work on Project Unlock, a more intelligent approach. It creates a virtual security system that can stop the theft of items inside a retail business using inexpensive Radio Frequency Identity (RFID) chips, the Internet of Things (IoT), and blockchain technology.

There are actually two interrelated systems at work. The Point-of-Sale (PoS) activation system constitutes the initial component of the protocol. This mechanism makes sure that only products that have been legitimately purchased will be turned on and work. While stolen items won’t be activated and won’t function.

In order to accomplish this, Lowe’s is embedding RFID chips inside every product. These chips have special serial numbers assigned to them that, when scanned at the time of purchase, activate the products. The majority of these items at Lowe’s are power tools, such as drills, nail guns, electrical saws, etc.

The second part of the protocol uses blockchain technology to keep an immutable, transparent record of all transactions and authorized purchases. These transactional facts are publicly available and impermeable. In order to protect the privacy of the buyers, Project Unlock will keep a transparent record of all purchases.

Because of this, if someone tries to resale a stolen item on the market, the buyer can quickly determine the product’s authenticity and whether it is a stolen item. For each item in its store, the corporation will produce a special NFT (Non-Fungible Token) in order to accomplish this.

Potential use cases of Project Unlock

Project Unlock may be used as a security measure on a much bigger scale, according to Lowe’s, and the corporation sees a lot of potential for their approach. To begin with, the system can be modified for any device that has moving parts or electrical components, including automobiles, home appliances, smartphones, and other technology.

It can also be modified for use with different products and industries. For instance, SmartLabel, a business that creates QR codes for trademarks and their items, and David Menard, the CEO of asset verification firm Real Items, claimed to have reached a MOM. Menard is working with this cooperation to develop “digital passports” for products in the form of NFTs. This system will make it easier to follow a product’s development throughout time. While this may not provide much in the way of security, it can provide a quick means to confirm a product’s validity, which can be useful across industries.

The one issue that still exists is how little people understand blockchain technology, which could prevent more blockchain-based security solutions from being adopted. Additionally, since blockchain is often associated with cryptocurrencies, retailers might be skeptical given what transpired in the cryptocurrency market in the preceding year. However, Lowe’s is confident that this won’t prevent Project Unlock from being developed or used. According to the corporation, it will be nearly impossible to thrive in the future without implementing new technologies.

In Conclusion 

One problem that is still present is how little people understand blockchain technology, which may limit the adoption of more blockchain-based security solutions. Additionally, considering the recent events in the cryptocurrency market, retailers may be dubious given that blockchain is frequently linked to cryptocurrencies. But Lowe’s is certain that this won’t obstruct the creation or application of Project Unlock. Without adopting new technologies, it will be almost difficult to prosper in the future, claims the firm.