Inflation is already a global issue, with several countries suffering from years of mismanagement. As more people turn to crypto as an inflation-proof investment and reliable medium of exchange, the demand for a truly universal crypto payment processor is increasing. Furthermore, the world is fast becoming a global village, and more individuals seek a payment method that fosters truly borderless funds transfers.
Borderless transaction processing is a unique selling point of traditional cryptocurrency transfers, which only require tokens and blockchain wallets. However, several emerging crypto payment solutions are moving away from the norm and adopting seamless and user-centric solutions.
Considering these new crypto payment processors are moving away from the norm, how are they completing payment settlements? This article will answer this question in detail. Before that, let’s examine what a crypto payment processor is.
A crypto payment processor is any service provider that enables the seamless transfer, receipt, and use of cryptocurrency for all types of payments. These service providers bridge the gap between traditional finance and DeFi by replacing the cumbersome process of sending and spending blockchain tokens with a stress-free alternative.
Before crypto payment processors, people used direct wallet transfers, off-ramps, and merchants to send and receive cryptocurrencies. These measures were complex, cumbersome, and expensive.
Let’s run through the process of using direct wallet transfers with a crypto merchant. The process involves sending cryptocurrencies to the merchant’s wallet, after which the individual receives the fiat equivalent. While this may seem effective, it is quite costly.
Imagine you want to use $50 and decide to convert it via a merchant. You will send the token to the merchant via their wallet address. The network will charge you a gas fee (usually within $1-$1.50 when you use the TRON network). After deducting this, you receive $48.50, and the merchant pays you the fiat equivalent of that amount.
While these amounts may seem small, they accumulate with every transaction and can become a challenge when sending small amounts of money. Besides the network fees, merchants set their own exchange rates to make a profit, and people rarely get the best deal. At the time of this article, $1 trades for £0.80. If you are lucky, you may find a merchant to buy your $50 at the rate of £0.75 to $1.
As mentioned earlier, a crypto payment processor creates a system that removes network fees and unstable exchange rates. How is this possible? What approaches or techniques do these service providers employ to enable cheaper and more efficient cryptocurrency transactions?
The points below provide a clue:
With a settlement system, reasonable fees, and fair exchange rates, every crypto payment processor can enable seamless local and international transactions.
As of December 2023, cryptocurrency users worldwide numbered approximately 575 million, an increase from 432 million at the beginning of the year. Should the bullish market persist, projections indicate this figure will likely rise to 850–950 million by the end of 2024.
Statista further predicts that user numbers will grow to 833 million by 2024 and nearly 1 billion (992.5 million) by 2028. This shows a clear increase in crypto adoption, thanks to institutional investments, business acceptance, and blockchain technology advancements.
An increase in crypto users will fuel the demand for crypto payment processors. Even banks may be compelled to offer cryptocurrency payments in one form or another.
