How do Bitcoin payment services work?
Bitcoin is a cryptocurrency or digital asset. The protocols that govern cryptocurrencies make crypto transactions resistant to frauds. Unlike the conventional credit card processing mechanism, here, you do not need a bank as mediator. This is because the Bitcoin and other cryptocurrencies are decentralized and as such, there are no governments or financial institutions with the power to issue or govern these.
How Bitcoin payments work:
The working of crypto payment services is different from traditional payment services. This is because the payment is first made by a user to a digital wallet. The user makes payments in crypto assets and not in fiat currencies like Euro or US dollars. The workflow is as follows:
To begin with, the customer chooses to make payments in Bitcoins when he wishes to check out at any store or on any online app. He then pays the amount necessary at the locked-in exchange rates that will be applicable at that time when the transaction is happening. The Bitcoin payment services will then convert the Bitcoins they get into currencies that you choose; this helps to do away with volatility risks. You can even choose to have the Bitcoins sent to your own wallet rather than have them exchange for traditional currencies. The apps like Bitcoin rejoin help in easy trading of bitcoin without investing much time and effort. The wallets serve as a convenient place to store bitcoin.
Bitcoin payment services will then transfer the details needed securely to the blockchain for the transactions to get validated and thereafter recorded on it. The miners who are responsible for verifying and adding transactions to a blockchain will get fees in exchange. These fees however are not given to the crypto payment services but rather to the miners for their efforts.
Advantages of using Bitcoin Payment Services:
- Unlike conventional credit card payment services, Bitcoin payment services will charge you much lower transaction fees. For instance, reputed Bitcoin payment service BitPay charges only 1% settlement fee to merchants as compared to the 3% fees charged to merchants for credit card payments.
- With Bitcoin payment services you can ensure smooth transfer of BTC any time from any place in the world because of its secure, borderless payment network. You may use any device, like smartphones or tablets, to make transfers to merchant accounts spread across different countries in a currency preferred by the merchant.
- Bitcoin payment services will guarantee transparency even in an environment marked by dynamic exchange rates. So, the user not only benefits from access to multiple platforms that can accept global payments but can also enjoy a genuine and reliable identity in the crypto world. Incidentally, customers would be keener to make payments to an established and reputed Bitcoin payment service provider rather than to an individual’s Bitcoin wallet.
When you have decided to offer Bitcoins or other crypto coins as payment, you must follow some important steps. You need to get in touch with your payment service provider directly to see if they can do this for you. When you still do not have a PSP, you must first identify a provider and create your merchant account. While you may need to submit certain documents and the task can be tedious and time-consuming, it is best to choose crypto payment services. Most progressive merchants have started embracing crypto coins as payments for their goods.