How to Choose a Crypto Payments Solution for Business
Crypto payments have many benefits compared to traditional payment methods, and are a popular use case for digital currencies. Since the first crypto payment for the infamous "Bitcoin Pizza" in 2010, a number of web3 payment innovations like stablecoins and new product offerings like payment streams are making crypto a cost-effective way for businesses to accept payments.
This article will explore five questions businesses should consider when evaluating crypto payment solutions for their business or project.
1) What is the payment model for your product or service?
Businesses that use subscription-based payment models vs. 1-off payments should be evaluated separately, and will determine the type of crypto payment solution you should consider. Additional questions include:
- Do customers pay you one-time or on a recurring basis?
- Are you selling a subscription?
- How is the subscription amount calculated each month?
- Are subscriptions a flat amount, or does it change with usage?
If you’re a merchant selling an item that requires one upfront payment, then these solutions are solid options:
These more institutional players offer a checkout page similar to what you would expect from web2. They also help your business set up a wallet and then customers can select a token and amount to send to that wallet. Typically, customers will be restricted to paying with the most popular tokens and stablecoins like Bitcoin, ETH, USDC, and USDT.
If your business has a subscription-based payment model, these solutions will fall short.
For example, if you’re charging a monthly subscription and using Coinbase Commerce, each month your customer needs to return to the Coinbase Commerce site and initiate another transaction manually. It’s a laborious process that leads to highly elevated customer churn.
A handful of smaller firms are tackling on-chain recurring payments and offer a crypto autopay capability. This allows customers to sign one transaction and then have funds pulled from their wallet at a set time. Crypto auto payments are similar to setting up autopay with your credit card.
All crypto autopay solutions are not created equal though.
As you look into solutions, it is important to understand how they handle:
- Variable rate pricing models
- Charging based on usage
- Number of users
- Metrics that change month to month
2) Is the crypto payments user experience simple and trustworthy?
One of the most significant barriers to crypto payment adoption has been the complexity of the user experience. While most crypto payment solutions still require a degree of knowledge and familiarity with crypto, the actual checkout flow should feel very similar to traditional payment methods.
Most of the solutions listed above offer a custom-branded checkout page as a standard feature. You will want to assess these checkout pages to see:
- How many clicks or fields are required before the user can actually pay?
- What helper text is offered to explain to the customer what is occurring?
While you do not want a solution that overwhelms the customer with technical details, most users paying in crypto will have some web3 knowledge and will want to understand where they are sending the funds and if they are interacting with a smart contract.
The best solutions give transparency to the end user, provide links to dashboards, and give visibility into block explorers to build trust.
Another element of user experience is the networks that the payment solution supports.
Using Ethereum as a payment network may seem logical given its mass adoption, but the gas fees could negate most of the cost-saving benefits of crypto. Instead Layer 2 blockchains like Optimism and Arbitrum or sidechains like Polygon might be more cost-effective.
Understand what networks your customers are already using, and then ensure your crypto payment solution will be able to support them.
3) In what tokens do you want to accept crypto payments?
Using an institutional payments provider will likely limit the number of tokens your customers are able to pay you in. Today, stablecoins are one of the most popular tokens selected when paying for goods and services because the price of a stablecoin does not change, unlike BTC and ETH which are volatile.
A crypto payment provider that offers the most popular stablecoins alongside the largest market cap cryptocurrencies will likely be sufficient. For businesses that are looking to offer a more diverse range of tokens though, it is important to research more crypto-native solutions which support a wider range of ERC-20 tokens. This is particularly relevant for DAOs and other crypto-native projects that want to facilitate an ecosystem for their native token.
Another consideration when being paid in crypto is what end token you as a business ultimately want to hold.
For example, you may be open to being paid in a native-token like BTC, but then desire to immediately swap into a stablecoin like USDC to limit currency risk. You may also want to swap from crypto to fiat immediately after being paid, so it is critical to understand if your payment provider has off-ramp capabilities.
As you evaluate potential crypto payment providers, assess their capabilities when it comes to swapping tokens to ensure your payment processing aligns with your balance sheet strategy.
4) Does the crypto payments solution offer dunning flow automation?
A “dunning flow” is an accounting term for asking someone for money. Dunning flows are the way that a business asks a customer for funds when that customer owes money.
Tactically, this means sending invoices, payment reminders, and late notices to customers. While this sounds straightforward, businesses spend hours and even days every month on payment collection activities.
In the world of web2 payments, most aspects of the dunning process have been automated through notifications and email automations. Unfortunately, in crypto, automated dunning is not yet a standard feature.
When your business is choosing a crypto payments provider, research how the web3 payments solution handles things like reminders and late payment notifications. It’s a detail that can save you hours of follow-up work and ensure that your customers are paying you on time month after month.
5) How does the crypto payment solution integrate with your financial back-office?
One final consideration is how crypto payments fit into the rest of your financial back-office stack. If you are being paid in both crypto and fiat, you will want to understand how your crypto solution integrates with your accounting and client-tracking tools.
For example, if you’re a subscription business, you may use a solution like Chargebee or Maxio to manage which subscribers have paid and should get access to your product. A crypto payment tool that has some level of integration with these services will make payment reconciliation much easier and save effort.
Many crypto payment solutions are just beginning to build out integrations, so as a client, you have the opportunity to influence which integrations are prioritized and can collaborate with providers to ensure your businesses’ needs are met.
Start Accepting Crypto Payments
One-time and subscription payments are a popular business use case for digital currencies like Bitcoin, Ether, and stablecoins. If your business is looking to accept crypto payments online, in-store, or on mobile, ask these five important questions to properly evaluate the best provider for your needs.