Crypto payments are becoming more and more widespread today. According to BitcoinWide, over 8,500 different businesses worldwide now accept crypto payments for their goods and services. And this number is constantly growing due to the overall increase in digital asset adoption, the development of the crypto market, and the crypto processing sphere in particular. But what is cryptocurrency processing? The answer to this question will be equally useful for both regular users and business representatives.
Crypto Processing: Basics
Conventional processing in the context of financial operations means processing payments, while crypto processing involves processing cryptocurrency payments. But it’s not that simple.
Crypto processing is a company that provides services for processing incoming and outgoing payments for various online services, stores, and offline businesses. The crypto processing team provides businesses with the necessary technologies to process payments, along with related services, which may include:
- digital asset storage;
- cryptocurrency exchange;
- conversion of cryptocurrencies into fiat currencies;
- withdrawal of funds to bank accounts and payment systems;
- preparation of financial statements;
- compliance consultation;
- data processing and others.
Moreover, crypto processing provides clients with technical and legal support. Some cryptocurrency processing companies may offer a wider range of services, such as brokerage services, OTC trading, XaaS services, and more.
Crypto processing is a company that acts as a financial intermediary between a business and its customers, enabling them to use cryptocurrencies to pay for goods and services.
To start working with crypto processing, users and businesses need to have at least a general understanding of topics such as:
- principles of blockchain networks;
- storage and use of cryptocurrencies;
- security measures when creating and using a cryptocurrency wallet.
In the context of crypto processing, it’s important to delve deeper into two terms — crypto gateway and crypto acquiring, as everyone interested in this theme will definitely encounter them.
What Is Crypto Gateway?
A crypto gateway is a technological platform that mediates electronic financial transactions using digital assets.
The terms “crypto gateway” and “crypto processing” are often used interchangeably, but they aren’t synonymous. Processing is responsible for the ability to process transactions overall, starting with developing a payment web interface and ending with issuing a receipt for funds transfer between banks, payment systems, and blockchains. A payment gateway is an essential element of the cryptocurrency processing infrastructure, but it’s only responsible for authorizing transactions, encrypting and transmitting financial information, and, if necessary, payer identification data.
A payment gateway performs the same functions in online payments as POS terminals do in offline payments, namely providing authorization, processing, and transaction security.
From the user’s perspective, a payment gateway may appear as a page on a website that pops up during the checkout process directly when making a payment — it usually requires entering payment card details or a crypto address and a transaction confirmation hash.
What Is Crypto Acquiring?
Crypto acquiring is a general term referring to the ability to accept online payments in digital assets for goods and services. Accordingly, connecting crypto acquiring involves integrating special infrastructure into an online platform that enables you to safely and efficiently accept payments in crypto.
Cryptocurrency acquiring is a key service of crypto processing, but not the only one.
How Crypto Processing Market Developed
The first cryptocurrency processing service is BitPay, which entered the market in July 2011, offering online businesses the ability to accept BTC payments.
By the fall of 2012, about 1,000 merchants were using BitPay’s processing services, and a year later, this number grew tenfold. By the end of 2013, its customers were located in 164 countries, and the total value of processed transactions exceeded $100 million.
In May 2014, BitPay was noticed by major investors. Richard Branson, Head of Virgin Group, and Jerry Yang, Founder of Yahoo, led a group of venture capitalists who invested $30 million in the development of BitPay. The overall valuation of the processing service reached $160 million by that time. It’s worth noting that the price of Bitcoin at that time was around $115.
BitPay dominated the crypto processing market until about 2017, when the general interest in cryptocurrencies, including as a payment instrument, grew amid the first significant surge in BTC quotes. New companies began to emerge in the market. Among them was CoinsPaid, which established itself as one of the market leaders in crypto processing by 2023. By the end of Q1 2023, the company had processed 41 million transactions worth €23 billion. Other major players in the sector include Coinbase Commerce, CoinPayments, CryptoCloud, and a dozen other services. Competition in this sphere is heating up, as according to a joint study by Bing Ventures and Alchemy Pay, the volume of the crypto payments market in the real economy could reach $316-$362 billion by 2026.
In such a situation, how do you choose the best crypto processing? Read about it in a special article by CP Media.
