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How to Choose a Crypto Payments Service Provider

Nov 24, 2022

Let us guide you through some of the key decisions you'll need to make and outline the features available from different varieties of solutions. Plus, we'll demystify some of the jargon we'll use as we go along.

Knowing the two different approaches to crypto payments

If you wish to take cryptocurrency on your site, you generally have two options:

  1. Cryptolite: If you'd like to take cryptocurrency payments and have no interest above that, this option is the right solution for you. It's important to find solutions that simply ensure you get an appropriate amount of money into your account as swiftly and easily as is possible.
  1. More: This category can get complicated quickly. If you'd like to retain the majority or even all of your crypto as cryptocurrency, or accept a larger variety of currencies or sell NFTs, you'll require higher-end methods.

Choosing between a custodial and non-custodial crypto-payments service

In the event of accepting cryptocurrency for your website The most crucial choice you'll need to take is deciding whether you want to use a custodial or non-custodial payments provider.

This is in conjunction with your selection of "crypto light" or "something more."

Providers of custodial crypto payment

For many merchants, this choice offers peace of mind and an easy user experience. You'll have access to support, can rely on the terms of service and can take advantage of more options (such as automatic settlement to your bank) as your service provider will manage your accounts in crypto for you.

If you pursue "crypto lightweight," custodial crypto payments providers are the only choice.

The benefits of a Custodial Crypto Payments provider are:

  • An extension that is fully integrated
  • Accepting any cryptocurrency or cryptocurrencies that are offered by customers
  • Directly to your bank account fiat currency
  • Account access with an email address and password
  • Support Services
  • Low transaction fees and security from chargebacks and refunds

Crypto payment providers that are not custodial

If you're an expert in crypto and want access to advanced capabilities, you may want look into a non-custodial service. If you choose a non-custodial solution, you'll have full control , and the sole obligation to the security and management of your cryptocurrency accounts. This is not something to be taken lightly. However, when you're a store owner with a valid license, it unlocks the full possibilities of cryptocurrency.

The advantages of a custodial Crypto payment service:

  • Access and control of your crypto as soon as it's received - no waiting for settlement from a third party.
  • Fewer restrictions from the terms and conditions. No anyone can revoke or deactivate the account of yours or your services.
  • All actions are subject to applicable laws and the capabilities of your individual. It is possible to sell what you'd you'd like and manage your crypto currency however you feel fit.
  • Sole responsibility for 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).

Cryptocurrency: Currency secured by the principles of cryptography (e.g. BTC, ETH, DOGE).

Stablecoin: The type of crypto that is tied to a fiat currency. (e.g. USDC (where USDC = 1 USDC equals one USD).

The advantages of cryptocurrency payment providers

There are plenty of features to consider when choosing between the custodial or non-custodial providers.

Below, you'll see the complete list of features as well as a list of considerations that illustrate how different options are. If you're using this list, you must be aware that this table is a high-level guide to what's feasible. Some partners may not provide every option.

Features Custodial Non-custodial
Contract with a third person
You sign up for an offer with a company governed by the terms of service. 		Y N
Account recovery
If you have lost access to your account, you may get a password reset request or access recovery by contacting the company. 		Y N
Support
The user will have access to and seek assistance through the service. 		Y N
Automatic exchange to stablecoin/other crypto
It is possible to opt to have your crypto changed to another crypto or stablecoin. 		Y Y
Automatic exchange of fiat currency
You can choose to have the crypto converted automatically to fiat. Note that exchange rate calculations and rates can differ depending on partner. 		Y N
Automatic Settlement to your Bank
You can decide to have the funds settled automatically to your bank. 		Y N
Receive the exact value in fiat currency
This can help avoid being exposed to volatility in the price of crypto. Solutions that are not custodial can reduce - but not eliminate - volatility by choosing to only allow stablecoins. 		Y N
Specific features for merchants
A few providers have features to make it easier for merchants to save time and effort. This includes things such as risk profiling (to help make sure you do not receive money from bad actors) and protection against overpayment or underpayment, and invoicing via email. 		Y N
Transaction finalization protection
Blockchains depend on blocks being created to complete transactions. The greater the number of blocks generated following a certain transaction, the more secure that transaction is. Protection helps avoid sending out products and then seeing a transaction be reversed. 		Y N
Funds insurance
All custodial or non-custodial solutions have a chance of being hacked. The insurance on funds is a protection for those using a custodial solution. However, protection varies widely and businesses should be aware of partners' insurance and refund guidelines. 		Y N
Y Y
Supports subscriptions/recurring payments
Paying with cryptocurrency, customers will need to authorize every payment. This means that recurring payments will not be an option, though some custodial solutions offer tools to generate and automatically send invoices based on a schedule. 		N N
Transaction fees that are low
Both custodial and non-custodial payment providers typically offer significantly lower transaction fees (1-1.5 percent) that traditional providers (2-3.5 percent). 		Y Y
Exposition to crypto networks (e.g. gas) fees
Direct cryptocurrency transactions have specific network charges - for Ethereum, these are known as gas fees. Payment processors may absorb these costs, while some transfer the costs on. 		N Y
Control solely
You are the only person who can make outgoing transactions using your account. Nobody else can approve transactions without access to your private key. 		N Y
Accept any cryptocurrency on any network
The processors for crypto payments provide a range of coins and crypto-based networks. Custodial services are constrained to the currency they accept. Other solutions are able to offer greater choices. 		N Y
integration
It's one thing to receive an amount of money, but it's quite another to identify which client made the payment and for which order. Our partners provide solid integrations that cover everything from setup to day-to-day management. 		Y Y

Examine your options and select the most suitable cryptocurrency payment service for your shop.

Cryptocurrency solutions can seem confusing, but it's worthwhile to offer the best payment option that meets yours and your customers' demands. Take the time to navigate through the pros and cons between the two kinds of cryptocurrency payment services, decide which best suits your particular business.