Crypto Payments Explained
- August 1, 2022
- Binance Academy Crypto Guides & Reviews Wallets
- Kuro Satoshi
Crypto payments are becoming more widely accepted by retailers, individuals, and businesses. While you can transfer funds manually, payment gateways provide a simpler way to accept crypto payments. This saves you from manually copying addresses and making mistakes. You can also use a crypto debit or credit card to make fiat payments with crypto you have in a linked account.
Crypto payments provide a cheap, quick, and fast way to transfer funds. There’s no need to use local fiat currencies for international transfers. A payment service will often be more intuitive than a wallet and also have customer support. On the other hand, a payment gateway provides less control, may charge fees, and takes longer to set up than a standard wallet.
You can start making crypto payments by using Binance Pay. The service is available to all Binance users with a crypto wallet and charges zero fees. Once you’re ready, you can begin making payments to any other Binance Pay user or supported retailer. You can also order a free Binance Card if you prefer making payments with a credit or debit card.
Although crypto is famous for speculation and investment, it does have another use case: payments. It’s easy to forget that people use cryptocurrencies like BNB, BTC, and BUSD to transfer value. Large retailers, such as Microsoft and Starbucks, and small businesses have begun to accept crypto payments for their goods and services.
This is usually done via a payment gateway to make the process simple. You can even use crypto to pay for items in fiat currency with a crypto card. So whether you want to pay back a friend or purchase an item, there are multiple options that use blockchain technology.
How do crypto payments work?
To help make the process foolproof, crypto service providers like Binance have created more intuitive crypto payment methods. These gateways turn a complicated process into one that can be done in just a few seconds. The exact steps differ depending on the payment processor, but the usual method is as follows:
1. A customer decides to pay for a good or service, or someone wants to pay a friend.
2. The recipient creates a digital invoice to be paid using their payment gateway. This is usually a QR code containing the receiving wallet address and the amount needed. For example, purchasing a $10 (US dollar) meal would require $10 of a specific cryptocurrency at the current market rate.
3. The payer scans the QR code with the app and confirms the payment.
4. The crypto is transferred to the payee’s account or digital wallet.
This whole process can be completed in just a few clicks. It’s also safer and more convenient than attempting to do all steps manually.
Crypto cards for payments
Another option for crypto payments is using a crypto-linked credit or debit card. This way, you can make payments using cryptocurrencies even if the payee only accepts fiat. To use a crypto card, you’ll need to store coins and tokens with your card provider. When you purchase something, the cryptocurrency exchange sells your digital assets for the required fiat and sends this to the payee. In some cases, it may also be that you pay off your monthly credit using crypto. The exact terms will change depending on the issuer or financial institution.
You can use crypto cards in more places than crypto payment gateways. However, it’s trickier to pay a friend directly unless they can accept card payment. If the payee wants to be paid in crypto, then a card also isn’t suitable. Both Visa and Mastercard currently offer crypto card options through different financial service providers.
What are the advantages of crypto payments?
Paying someone in crypto has advantages even without using a payment gateway or crypto card. When combined with a payments system, the experience has the best of both worlds:
2. Depending on the crypto payments provider, your transactions can go through almost instantly. This typically happens when you both use the same service. Even if your transaction isn’t instant, it can often be quicker than a bank account transfer and cheaper with fewer transaction fees.
4. A crypto payments gateway is, for many newcomers, simpler to use than setting up and managing a wallet themselves.
What are the disadvantages of cryptocurrency payments?
While the advantages are easy to see, experienced users might find some limitations when making crypto payments:
1. You have less control than setting up a wallet yourself. Many people prefer the traditional experience of having full custody over their crypto. A payment gateway effectively adds an intermediary into the process.
4. Some payment networks will charge fees for the service they offer.
5. Accepting crypto as a payment method still isn’t widely accepted.
What is Binance Pay?
How can I use Binance Pay?
Using a Binance Card