For businesses planning to add cryptocurrency support, it’s important to grasp how crypto processing works and how to pick a suitable provider of such services. But it’s worth noting right away that in theory, everything will sound much simpler than it turns out in practice.

How Does Crypto Processing Work?

How Does Crypto Processing Work?

The key feature provided by payment service providers for companies planning to accept cryptocurrencies as a payment option is acquiring, which means the ability to process crypto payments.

The process of processing cryptocurrency payments looks something like this:

  1. Transaction initialization. At this stage, the buyer selects goods or services and proceeds to payment. During the checkout stage, they choose the option to pay in crypto.
  2. Generation of the cryptocurrency address and the payment amount. The merchant’s system or integrated crypto payment gateway automatically generates a unique cryptocurrency address to receive the transaction. Usually, a temporary address is generated, linked to a specific purchase. At this stage, the payment amount is also determined, which may be fixed in fiat currency and converted to crypto at the current exchange rate.
  3. Payment by the buyer. The buyer initiates the transfer of the amount to the specified address using their crypto wallet. The transaction is then transmitted to the blockchain network for confirmation.
  4. Confirmation of the transaction on the blockchain network. A standard procedure for any crypto transaction is that it must be confirmed by validators and added to the next block of the blockchain network. The confirmation time may vary depending on the network load and the transaction fee set by the buyer.
  5. Payment processing and confirmation. Once the transaction is confirmed on the blockchain, the merchant’s system or payment gateway records the payment receipt. Some systems may require the buyer to provide a unique identifier or transaction hash at the confirmation stage.
  6. Transaction completion. The merchant’s system updates the order status, which goes to further processing, and the user receives a receipt. 

At this point, the transaction processing is completed. Many modern payment service providers also offer automatic conversion of the received crypto into fiat funds. Moreover, the processing service handles various financial and accounting records related to the transaction, which can be automatically added to different reports — accounting, analytical, and others.

Furthermore, the processing service may offer other features not directly related to processing crypto payments. More details on this are given in CP Media’s article about crypto processing.

How to Choose Crypto Processing Service?

How to Choose Crypto Processing Service?

When selecting a suitable crypto processing service, there are a few key factors to consider:

  1. Asset and transaction security. 
  2. Transaction fees. 
  3. Range of available digital assets and fiat currencies. 
  4. Quality of customer support. 
  5. Integration technical capabilities. 
  6. Payment features. 
  7. AML and KYC compliance.
  8. Regulatory compliance. 

One of the industry leaders is CryptoProcessing, known for its high level of security, professional team, support for 20+ popular cryptocurrencies and 40+ fiat currencies, less than 1% commission, automatic conversion, withdrawal of funds to bank accounts via SEPA or SWIFT, and much more.

Some of the points listed above are worth examining in more detail.

Security and Commission Costs

Security is a pivotal factor. How to assess its level? Pay attention to independent audits, look for past incidents, and assess their consequences. Next in line is financial costs, such as commissions or other forms of payment for processing services. These two factors are directly related to the security of funds and revenue levels.

User Convenience

Those making decisions should have a good understanding of customer preferences in terms of digital asset usage. If the majority of customers use XRP and SOL and the business is registered in the EU, look for the processing service that can handle these cryptocurrencies, convert them to euros, and withdraw funds to SEPA-connected bank accounts.

Besides, the processing should provide a user-friendly interface and clear payment procedures. The simpler and more convenient it is, the lower the bounce rate.

Customer Support

Availability of high-quality customer support is an important aspect in the context of business and processing interaction. Support should be provided 24/7 by highly qualified specialists through various communication channels. While it may sound like a utopia, crypto processing companies try to offer the best service to attract and retain clients, so the bar shouldn’t be lowered here.

Questions regarding licensing and compliance with the legislative framework of the countries where the business operates are very important. It’s best to clarify these details with a lawyer and an accountant because there’s no joking around when it comes to the law and regulators.

In particular, it’s crucial to carefully verify the compliance of the services provided by the crypto processing business with the requirements of the target jurisdictions regarding the following areas:

  • Anti-Money Laundering (AML);
  • Combating the Financing of Terrorism (CFT);
  • Know Your Customer (KYC) requirements. 
Choosing Crypto Processing Based on Personal Experience

Choosing Crypto Processing Based on Personal Experience

As a rule, all the points outlined above can be clarified in discussions with representatives of a particular crypto processing service. As noted earlier, the crypto payment market is actively growing, and crypto payment service providers are making significant efforts to attract users.

For potential customers, marketers prepare presentations and detailed descriptions of processing services. Upon the first request, a manager will conduct a personal presentation, answering all the questions. Moreover, companies often provide demos of their payment service so that potential clients can evaluate its convenience based on their personal experience.

Ultimately, the choice of a processing service comes down to the following steps:

  1. Defining the core needs of the business. 
  2. Monitoring the market and selecting several companies whose services best meet the needs of the business. 
  3. Personally meeting with representatives of each selected company and thoroughly studying all aspects of the offered services — terms, technical features, convenience, and others. 

Finally, you’ll form an individual understanding of each processing service that meets the needs of your business and make a thoughtful, well-considered choice, which will be the key to a long-term and productive cooperation in the future.

Author: Evgeny Tarasov
#Business #Finance #FinTech