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What is the best way to choose a crypto Payments Service Provider

Nov 24, 2022

Let us guide you through some of the crucial decisions that you'll have to make and outline the options available in different varieties of solutions. Plus, we'll demystify some terms as we go along.

Knowing the two different approaches to crypto payments

If you are looking to allow cryptocurrency on your site, you generally have two choices:

  1. Crypto lite: If you'd like to use cryptocurrency to pay for your purchases and have no interest beyond that, this is for you. Look for options to ensure that you have an appropriate amount of money into your account as fast and cheaply as is possible.
  1. More: This category can be complicated in a short time. If you'd like to retain the majority or even all your cryptocurrency as cryptocurrency, or accept a larger range of currencies, or sell NFTs, then you'll require higher-end methods.

Choosing between a custodial and non-custodial crypto payment provider

In the event of accepting cryptocurrency for your website the main option you'll be faced with is whether you'll choose a custodial or non-custodial payments service.

This goes hand-in-hand with your selection of "crypto light" or "something different."

Providers of custodial crypto payment

For many merchants, this option offers peace of mind and an experience that is familiar to users. It will provide support, can rely on conditions of service, and take advantage of additional options (such as automatic settlement to your bank) because your service provider manages your crypto accounts on behalf of you.

If you want to pursue "crypto light," custodial crypto payments service providers are your only option.

The advantages of custodial crypto payments providers comprise:

  • A fully-integrated extension
  • Accepting one or more cryptocurrencies from customers
  • Payments are sent directly into your bank account fiat money.
  • Account access with an email and password
  • Support services
  • The lowest transaction fee and the protection from refunds and chargebacks

Crypto payment providers that are not custodial

If you're an expert in crypto and want access to advanced capabilities, it's possible to consider a non-custodial solution. If you choose a non-custodial solution they will give you complete authority and control over your security and the management of your cryptocurrency accounts. It's not something you should do lightly. But when you're a store owner with a valid license, it unlocks the full potential of cryptocurrency.

Benefits of using a non-custodial Crypto payment service:

  • Control and access to your crypto immediately after it's accepted - no waiting for settlement from a third person.
  • Fewer restrictions from terms and conditions - no one can suspend or cancel your account or service.
  • All actions are subject to applicable laws and your personal capabilities. You are able to sell anything you'd like to whoever you'd like, and control your cryptocurrency however you see best.
  • All responsibility is your account's security . No third-party data breaches or hacks could affect your account funds.

Crypto vocab check

Fiat currency: Currency issued by a government (e.g. USD, EUR, GBP).

The term "cryptocurrency" refers to Currency secured by digital cryptography (e.g. BTC, ETH, DOGE).

Stablecoin: It's a type of currency tied to a fiat currency. (e.g. USDC where USDC = 1 USDC = one USD).

Features of crypto payments providers

There are plenty of features that you should consider when choosing the custodial or non-custodial providers.

Below, you'll find an extensive list of options as well as a list of considerations that 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 possible. Some partners may not offer every feature.

Features Custodial Non-custodial
Contract with a 3rd party
When you sign up to the service of a business governed by terms of service. 		Y N
Account recovery
If you lose access to your account, it is possible to get a password reset request or account recovery service by contacting the company. 		Y N
Support
You'll be able to access and seek assistance via the company. 		Y N
Automatic exchange of stablecoin or other crypto
You can decide to have the crypto converted to a different crypto or stablecoin. 		Y Y
Automatic exchange to fiat
You may choose to have cryptocurrency converted into fiat automatically. Note that exchange rate calculations and rates can differ depending on the partner. 		Y N
Automatic settlement to your bank
You can opt to have your money be automatically transferred to your bank. 		Y N
Get the exact amount of fiat currency
This can help avoid being exposed to fluctuation in price for crypto. Solutions that are not custodial can reduce - but not eliminate - fluctuations by choosing to accept stablecoins. 		Y N
Specific features for merchants
Some providers offer features to save merchants time and energy. They include features like risk profiling (to ensure your business doesn't get funds from fraudsters) and protection against overpayment or underpayment, and email invoicing. 		Y N
Transaction finalization protection
Blockchains rely on 'blocks' to be produced in order to finalize transactions. The more blocks created following a specific transaction, the safer that transaction is. The protection helps prevent sending out goods and then having a transaction be reversed. 		Y N
Insurance for funds
Custodial as well as non-custodial options carry a risk of hacking. Funds insurance can protect the users of a custodial system. The protection isn't the same for every client and it is important for merchants to research their partners' insurance and reimbursement guidelines. 		Y N
Y Y
Supports subscriptions/recurring payments
Customers paying with cryptocurrency will need to authorize every payment. So recurring payments are not an option, though certain custodial services offer the ability to automatically generate and send invoices on a regular basis. 		N N
Transaction fees that are low
Both custodial and non-custodial payment service providers usually offer considerably lower transaction charges (1-1.5 percent) as compared to traditional payment services (2-3.5 percent). 		Y Y
The exposure to crypto network (e.g. gas) fees
Direct cryptocurrency transactions have their own network fees - with Ethereum this being known as 'gas' charges. Certain payment processors pay these costs, while some transfer these fees on to the user. 		N Y
Control solely
You are the only person who can make outgoing transactions through your account. Any other person or entity cannot authorize transactions unless they gain access to your private password. 		N Y
Accept all cryptocurrency on any network
Payment processors that accept crypto support a different range of crypto networks and coins. When you use custodial options, you're limited by the currencies they can support. Non-custodial solutions can offer a more alternatives. 		N Y
integration
It's one thing to receive a payment, it's another to determine which person paid for the transaction and which payment. Our partners offer robust integrations covering everything from setting up to managing daily. 		Y Y

Review your options and choose the most suitable cryptocurrency payment service for your store

Cryptocurrency solutions can seem confusing, but it's worthwhile to offer solutions that are best suited to you and your clients' needs. Make sure you go through the advantages and disadvantages of the two types of payment providers that use crypto, and then consider which specific provider will best suit your business.