Crypto Payment Gateway

Crypto Payment GatewaySince Europe is the largest crypto economy in the world, the number of consumers willing to pay for products and services with cryptocurrencies is naturally growing and having such a payment option in Europe can help businesses to increase customer conversion rates.

If you’re a forward-looking business owner, you should certainly consider allowing your customers to pay with cryptocurrencies which would expand the functions of your payment processing ecosystem and give you a strong competitive advantage. While you can use your personal crypto wallet to accept cryptocurrency payments, there is also a more efficient method – a crypto payment gateway – that can connect your online store with a payment processor.

A payment gateway is a client-facing type of software supplied by payment service providers, usually integrated into an online store or at the credit card terminal of a physical store, which enables merchants to either accept or decline credit and debit cards and other types of payments in a safe and secure way. A transaction can’t be processed without first going through the payment gateway.

In an online store, this is the section where a client is asked to select a payment method (credit or debit card or an online payment system such as Paypal) and enter the payment details. Many of today’s payment gateways allow customers to pay in cryptocurrencies and at the same time enable merchants to automatically have cryptocurrency payments converted into fiat money during the transaction process which allows for the elimination of the volatility inherent to cryptocurrencies.

This means if you have reservations about storing cryptocurrencies or have no understanding of this new payment means, a crypto payment gateway can momentarily remove this perceived hurdle by using its own crypto wallet to complete every transaction between a customer and you and by instantly converting cryptocurrencies into the fiat currency of your choice.

If you prefer to store received cryptocurrencies in your crypto wallet instead of converting them into cash, there’s an increasing number of crypto payment gateway providers that facilitate direct payments to merchants’ crypto wallets.

How It Works

How the payment process usually works:

  • A customer selects a crypto payment method enabling them to send cryptocurrencies from their crypto wallets and enters their payment details at the payment gateway of an online store
    • The total amount of cryptocurrencies is determined by pricing them at their market value at the time of the transaction
  • The payment gateway validates the customer’s data, as well as verifies the availability of the customer’s funds
  • The payment gateway encrypts the customer’s data and sends it to the payment processor of a merchant acquiring bank
  • The merchant acquiring bank sends the information to the customer’s crypto wallet service provider to approve the transaction
  • The customer’s crypto wallet service provider either authorises or rejects the transaction and sends this data back to the merchant acquiring bank
  • The merchant acquiring bank sends the payment authorisation data to the payment gateway
  • If the payment is approved, cryptocurrencies are momentarily converted into the fiat currency of a merchant’s choice
    • If you’ve selected a payment gateway provider that allows sending payments directly and instantly to your own crypto wallet, the payment won’t be converted
  • The payment is transferred to the merchant’s bank account or wallet

In this context, the functions of a payment gateway include:

  • Collecting customer’s payment details
  • Payment data encryption
  • Determining which card association has issued the bank card
  • Sending the transaction data for payment validation
  • Sending the transaction data to the payment switch
  • Either declining or approving payment transaction
  • Protection from fraud
  • Securely saving payment data for future purchases

How to Decide What Works Best for You

Things to consider before choosing a crypto payment gateway provider:

  • Whether a provider of a payment gateway is fully licensed in your selected regions and countries
  • Compliance with data protection regulations, particularly with the GDPR
  • Availability of your customers’ preferred payment methods
  • The provider’s understanding of the area of your business
  • Types of cryptocurrencies the provider accepts
  • Risk management software, particularly the type that can prevent fraudulent transactions and cyber attacks
  • Compatibility with your online store
  • Whether the software is easy-to-use and speedy
  • Set up fees and periodic pricing
  • Whether the system is borderless or available only in particular regions
  • Whether the system can be localised in terms of currencies and languages
  • Whether the provider also offers seamless payment processing
  • Whether the payment gateway technology comes with flawless customer service and support, including maintenance
  • A type of payment getaway that suits the infrastructure of your website

You can choose from the following types of payment gateways:

  • Self-hosted payment gateways (e.g. Stripe) are completely integrated into your website to facilitate on-site payment which means a customer enters their payment details on your online store and then those details are sent to the payment gateway’s URL
    • The advantages include full control over a customer’s payment experience and a faster checkout process
    • The disadvantages include the absence of a technical support team which means any technical hiccups and major failures will be your responsibility and may come pricey
  • Hosted payment gateways (e.g. PayPal) facilitate off-site payments as a customer is directed away from your website to enter their payment details on the payment gateway provider’s page for processing
    • The advantages include access to a technical support team, better transaction analytics and the absence of data security burden as sensitive payment details are stored on the provider’s servers
    • Unfortunately, this type of gateway won’t allow you to fully monitor and control your customer’s payment experience as it doesn’t happen on your online store
  • API-hosted payment gateways (e. . Binance Pay) allow a merchant to handle the collection of payment data and processing of the payment directly on the online store, thanks to an API (application programming interface)
    • You can benefit from such advantages as complete control of the website design and a fully customisable checkout experience, integrated with a variety of devices
    • One of the disadvantages is compliance with strict local regulations which is your responsibility as all the payment data is stored on your online store

Crypto Payment Gateway Regulations in Europe

When choosing a crypto payment gateway provider, you simply must be sure that it’s fully compliant and trustworthy. To do so, define what local and regional regulations are applicable and which national authority is responsible for supervising the bank or provider, including whether it’s listed as a licensed business. Below is an outline of relevant European regulations but keep in mind that due to the legal intricacies you should seek a personalised consultation with our legal experts here at IB-IA GROUP UAB.

When selecting a crypto payment gateway provider, you should take the following legislation into consideration:

  • European and national crypto regulations prior to deciding to add cryptocurrencies as a payment option to make sure cryptocurrencies are permitted in particular countries and regions
  • The Payment Services Directive (PSD), the purpose of which is to encourage competition and enhance safety within the digital payments market

Crypto Payment Gateway Providers in Europe

There are three ways to obtain a payment gateway – through your merchant acquiring bank, through your merchant account service provider or independently as long as your selected software can be integrated into the merchant acquiring bank’s workflow.

The following crypto payment gateway providers are available in Europe and globally:

  • Stripe
  • Binance Pay
  • Coinbase Commerce
  • Coingate
  • Paypal
  • BitPay
  • Square
  • ALFAcoins
  • Blockonomics
  • NOWPayments

Requirements for Merchants

To be eligible for a merchant account and such services as a crypto payment gateway, you must have a fully registered business and prepare all corporate documents.

To apply for a merchant’s account with a crypto payment gateway, you have to supply the following information:

  • Details about the ownership and senior managers of the business, as well as business activities and intended use of the account
  • A country where your business is registered
  • Legal business structure (it determines what features and services you’ll get access to)
  • An address of your business operations
  • Business email address

Documents required to obtain a  crypto payment gateway:

  • Incorporation documents or other business documents
  • Proof of business address
  • Proof of identity of every individual with managerial control of the business
  • A tax form which differs depending on the country where a provider and a merchant are registered

How to Obtain a Crypto Payment Gateway in Europe

If you’re planning to obtain a crypto payment gateway, you probably already have a merchant account and have a business relationship with a merchant account service provider who facilitates more common payment methods. You may want to request them to offer a crypto payment gateway. If this isn’t an option, consider finding a solution in the hands of more advanced providers.

To obtain a payment gateway, you should usually take the following steps:

  • Define your business and your customers’ needs (specify cryptocurrencies, the budget you can dedicate, etc.)
  • Look up, compare and select a merchant account service provider that offers crypto payment gateways
  • Understand what regulatory environment your selected crypto payment gateway operates in and ensure it’s a fully licensed service
  • Submit an application along with required documents to the selected merchant account service provider or directly to the merchant acquiring bank

If you’re ready to grow your business in Europe by embracing the most advanced payment methods, our team here at IB-IA GROUP UAB will be delighted to assist you in the most efficient way. We have eight years of experience in helping clients to obtain payment gateways for European markets. We use our vast network of trusted partners in the European financial services industry to offer the most suitable and cost-effective solutions that improve the functioning of the companies we serve.