Crypto Payments, Educational
Choosing Open-Source vs. Third-Party Crypto Payment Processors
Last updated: July 14, 2023 9 min read
Navigating the world of cryptocurrency can feel like a daunting task, especially when you’re an online business owner trying to keep up with the times. Accepting cryptocurrencies isn’t just a trend—it’s becoming a necessity.
With options like the open-source BTCPayServer and the third-party crypto payment processing services like CoinGate, the choice you make will depend on your business needs.
This article will help you understand these options and make an informed decision.
Understanding Cryptocurrency Payment Processors
Running a business in the digital age, particularly one that operates online or globally, means dealing with a multitude of payment methods. Traditionally, these would include credit cards, debit cards, and perhaps even bank transfers or checks.
However, in recent years, a new type of payment has started gaining considerable traction – cryptocurrencies.
Cryptocurrencies, like Bitcoin, Ethereum, and many others, are digital or virtual currencies that use cryptography for security. They are decentralized, operating on technology called blockchain, which is a distributed ledger enforced by a disparate network of computers.
But while cryptocurrencies are becoming increasingly popular, they present a unique challenge for businesses. Cryptocurrencies operate differently from traditional fiat currencies. They are decentralized, meaning there’s no central bank that issues them. They exist only in the digital world, and their value can fluctuate wildly from day to day.
This is where cryptocurrency payment processors come in. These are services that allow businesses to accept transactions in Bitcoin and other cryptocurrencies. They work by accepting cryptocurrency on behalf of the merchant, converting it into the merchant’s preferred fiat currency, and then sending the final amount to the merchant’s account.
This not only simplifies the process of accepting cryptocurrency payments but also mitigates the risk of value fluctuations. The payment processor takes on the risk of the volatile cryptocurrency market, and the business receives the exact amount they’ve charged for their goods or services.
Additionally, cryptocurrency payment processors often offer various features to make the integration of cryptocurrency payments easier for businesses. This includes things like plugins for e-commerce platforms, point of sale apps for physical stores, and even invoicing and billing services.
In short, cryptocurrency payment processors are an essential tool for any business looking to accept Bitcoin or other cryptocurrencies, making it as easy as accepting a credit card payment. They allow businesses to tap into a new customer base, without having to worry about the complexities and risks associated with handling cryptocurrencies themselves.
Open-Source Crypto Payment Processors: BTCPayServer
BTCPayServer is a self-hosted, open-source cryptocurrency payment processor that’s trusted by numerous businesses and individuals worldwide. It’s secure, private, censorship-resistant, and free to use, making it an appealing choice for those wanting full control over their transactions.
Open-source means that its source code is freely available for anyone to view, modify, and distribute. This transparency offers a level of security and trust that proprietary systems struggle to match because you can verify the software’s functionality yourself or trust in the community of developers and users who regularly scrutinize and improve the code.
As a self-hosted solution, BTCPayServer is installed on your own server, providing you with unparalleled control over your funds and transaction data. Unlike third-party services, which require you to entrust your funds to them, BTCPayServer allows direct peer-to-peer transactions from the customer to the merchant. This ensures that you’re always in control of your funds and you’re not dependent on a third-party service to process your transactions.
BTCPayServer supports Bitcoin, as well as various other cryptocurrencies, giving businesses the flexibility to accept multiple types of digital assets. Moreover, it’s been developed to mimic the user experience of traditional, fiat payment processors, providing customers with a familiar checkout experience.
Now, while BTCPayServer offers numerous benefits, it’s not without its drawbacks. Let’s delve into the pros and cons to give you a clearer picture of what using BTCPayServer entails:
Pros of BTCPayServer:
- Complete Control: With BTCPayServer, you’re the master of your domain. You have full control over your funds and transaction data, providing you with an unparalleled level of financial autonomy.
- Enhanced Privacy: It’s your business, and BTCPayServer ensures it stays that way. By eliminating third-party involvement, your transaction data remains private.
- Cost-Effective: BTCPayServer charges no processing fees or subscription fees, making it a cost-effective choice for businesses, especially for those with high transaction volumes.
Cons of BTCPayServer:
- Technical Challenge: BTCPayServer is a powerful tool, but power often comes with complexity. Setting up and maintaining a BTCPayServer requires a certain level of technical expertise, which might be challenging for non-tech savvy business owners.
- Security Responsibility: With great control comes great responsibility. While BTCPayServer gives you full control of your funds, it also means you’re fully responsible for their security.
Third-Party Crypto Payment Processors: CoinGate
CoinGate is a leading cryptocurrency payment gateway, enabling various businesses worldwide to accept Bitcoin and other cryptocurrencies as payment for their products or services. Unlike open-source solutions, CoinGate takes care of the complexities of cryptocurrency transactions for you, acting as a middleman between the buyer and the seller.
As a third-party processor, CoinGate provides an invaluable service for businesses that want to accept cryptocurrencies but don’t want the hassle of managing these transactions themselves. CoinGate takes on the task of accepting cryptocurrency from the customer, converting it into a fiat currency, and then depositing the final amount into the merchant’s account.
One of CoinGate’s standout features is its ease of use. The platform is designed to be user-friendly, even for those with limited technical knowledge. CoinGate provides a simple interface and clear instructions, making it easy for businesses to start accepting cryptocurrencies.
Furthermore, CoinGate supports a wide range of cryptocurrencies, not just Bitcoin. This gives businesses the flexibility to accept 70+ types of digital assets, catering to a wider customer base. CoinGate also offers additional services beyond payment processing, such as the ability to buy and sell cryptocurrencies directly through the platform.
However, like any service, CoinGate has its pros and cons:
Pros of CoinGate:
- Ease of Use: CoinGate is like the friendly assistant who takes care of the technicalities. It’s easy to set up and use, and you don’t need much technical knowledge to integrate it into your website.
- Support: Just like a trusty sidekick, CoinGate provides support to its customers, a godsend if you encounter any issues.
- E-commerce Ready: CoinGate integrates seamlessly with major e-commerce platforms. It offers official payment processing plugins and extensions, making it an excellent choice for online stores.
- Additional Features: Beyond processing payments, CoinGate offers additional features like a refund functionality, crypto-to-fiat settlements, permissions for account management, accounting suite, etc.
Cons of CoinGate:
- Fees: CoinGate charges a processing fee for its services. While the fee is relatively low, it’s still an additional cost to consider.
- Less Control: With CoinGate, you entrust your transactions to a third party, which means you have less control compared to a self-hosted solution like BTCPayServer.
Key Differences between BTCPayServer and CoinGate
Choosing between BTCPayServer and CoinGate can feel like a balancing act. Each platform offers unique benefits but also has potential drawbacks.
- Security: Both platforms prioritize security, but the responsibility varies. With BTCPayServer, the security of your funds is in your hands. With CoinGate, you rely on security measures.
- Cost vs. Convenience: BTCPayServer is a cost-effective choice, but it comes with a learning curve. CoinGate, while charging a fee, offers streamlined experience, flexibility, and customer support.
- Integration: CoinGate’s easy integration with major e-commerce platforms can be a significant advantage for online stores. BTCPayServer, while not offering the same level of e-commerce integration, provides unparalleled control and privacy.
Advantages of Accepting Cryptocurrency Payments with Crypto Payment Processors
By implementing services like CoinGate into your business operations, you will always end up in a win-win situation. Here’s why:
- Get Paid Instantly and From Anywhere: When customers use crypto assets, their location does not impact the speed or cost of transactions in any way. CoinGate ensures payments are processed in seconds, reducing the otherwise lengthy waiting time.
- Avoid Costly and Inconvenient Currency Conversions: If your business makes international deals, cross-border payments via multiple banks through several accounts can get quite frustrating. Paying or collecting payments in digital currency instead does not involve any cross-currency settlements.
- Enjoy Lower Transaction Fees: The fee that crypto payment providers like CoinGate charge is several times smaller than what traditional means of payment charge and, in the best-case scenario, does not exceed 1% of overall transaction volume.
- No More Fraudulent Chargebacks: Cryptocurrencies make fraudulent chargebacks a thing of the past – it is impossible to charge cryptocurrency wallets without their owner’s permission.
- Embrace New, Wealthier Customers: Blockchain-friendly customers tend to spend twice as much money than those paying with credit cards and are more prone to come back another time if their experience is positive.
- Use Crypto for Marketing Opportunities: By providing means to pay with crypto, merchants gain a competitive advantage in the early adopter’s market and access a new segment of customers that only gets broader with time.
- Stay in Control of Your Money: When you get paid in cryptocurrency, it’s up to you whether you want to keep it as it is on the blockchain or immediately exchange it for a local fiat currency through CoinGate upon receiving the final settlement.
What is the Best Way to Accept Crypto?
The choice between BTCPayServer and CoinGate is like choosing between driving your car or hiring a chauffeur.
If you enjoy the drive and know the route, BTCPayServer gives you the wheel. If you’d rather sit back and enjoy the ride, CoinGate is your chauffeur. Both get you to your destination; the choice depends on your journey’s preferences.
Cryptocurrencies did not become mainstream overnight, and it took thousands of people and years of education to establish their current role in the financial markets. Now that the groundwork has been done, it has become easy to become part of the global economy and accept cryptocurrency.
Are you ready to up your game? Accept crypto payments today with the help of the CoinGate payment processor and start your crypto journey right away. Sign up for CoinGate services.