Crypto payments offer many advantages over traditional payment methods and have become a popular use case for digital currencies. Since the first crypto payment for the infamous "Bitcoin Pizza" in 2010, Web3 payment innovations such as stablecoins and new product offerings like payment streams have made crypto a cost-effective way for businesses to accept payments.

In this article, we will explore five key questions businesses should consider when evaluating crypto payment solutions for their business or project. 

Factors to Consider Before Choosing a Crypto Payment Provider

As we delve into the world of crypto payments, it's crucial to understand the factors that should be considered before choosing a crypto payment provider.

This section will guide you through the key considerations, helping you make an informed decision for your business or project. From understanding the payment model of your product or service to evaluating the user experience of crypto payments, we'll explore the essential questions that will shape your choice of a crypto payment provider.

1. What is the payment model for your product or service?

When evaluating crypto payment solutions, it’s important to consider the payment model of your product or service. Businesses that use subscription-based payment models should be evaluated separately from those that use one-off payments, as this will determine the type of crypto payment solution that is most suitable.

Additional questions to consider include:

1. Do customers pay you one-time or on a recurring basis?
2. Are you selling a subscription?
3. How is the subscription amount calculated each month?
4. Are subscriptions a flat amount, or does it change with usage?
   

If you’re a merchant selling an item that requires a one-time, upfront payment, there are several solid options available for crypto payment solutions, such as:

• Stripe
• Coinbase Commerce
• Crypto.com
• BitPay

These institutional players offer a checkout page similar to what you would expect from Web2. They also help your business set up a wallet, allowing customers to select a token and amount to send to that wallet. Typically, customers will be restricted to paying with the most popular tokens and stablecoins, such as Bitcoin, ETH, USDC, and USDT.

However, these solutions may fall short if your business has a subscription-based payment model. For example, if you’re charging a monthly subscription and using Coinbase Commerce, your customer would need to return to the Coinbase Commerce site each month and manually initiate another transaction. This can be a laborious process that leads to high levels of customer churn.

Fortunately, a handful of smaller firms are tackling on-chain recurring payments and offering a crypto autopay capability. This allows customers to sign one transaction and then have funds automatically pulled from their wallet at a set time, similar to setting up autopay with a credit card.

It’s important to note that not all crypto autopay solutions are created equal. As you evaluate these solutions, it’s important to consider their capabilities and features to ensure they meet the needs of your business.

As you look into these 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 adopting crypto payments has been the complexity of the user experience. While most crypto payment solutions still require a certain level of crypto knowledge and familiarity, the actual checkout process should be similar to traditional payment methods.

Many of the solutions mentioned earlier provide a custom-branded checkout page as a standard feature. It’s important to evaluate these checkout pages to determine:

• The number of clicks or fields required before the user can complete the payment.
• The type of helper text provided to explain to the customer what is happening.

While you don’t want a solution that overwhelms the customer with technical details, most users making crypto payments will have some Web3 knowledge and will want to understand where they are sending their funds and whether they are interacting with a smart contract.

The best solutions offer transparency to the end user, provide links to dashboards, and offer visibility into block explorers to foster trust.

Another aspect of user experience is the network supported by the payment solution. While it might seem logical to use Ethereum as a payment network due to its widespread adoption, the gas fees could negate most of the cost-saving benefits of using crypto. Instead, Layer 2 blockchains like Optimism and Arbitrum or sidechains like Polygon might be more cost-effective.

It’s important to understand what networks your customers are already using and ensure that your crypto payment solution can support them.

3. In what tokens do you want to accept crypto payments?

When using an institutional payment provider, it’s important to note that this may limit the number of tokens your customers can use to pay you. Currently, stablecoins are one of the most popular tokens chosen for paying for goods and services. This is because the price of a stablecoin remains stable, unlike more volatile tokens such as BTC and ETH.

A crypto payment provider that offers the most popular stablecoins and the largest market cap cryptocurrencies is likely sufficient for most businesses. However, it’s important to research more crypto-native solutions that support a wider range of ERC-20 tokens for businesses looking to offer a more diverse range of tokens. This is particularly relevant for DAOs and other crypto-native projects that want to facilitate an ecosystem for their native token. 

When being paid in crypto, businesses need to consider the end token they 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 in 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 requesting payment from a customer who owes money to a business. This typically involves sending invoices, payment reminders, and late notices to customers. While this may seem straightforward, businesses often spend significant time on payment collection activities.

In Web2 payments, many aspects of the dunning process have been automated through notifications and email automation. However, automated dunning is not yet a standard feature in the crypto world.

When choosing a crypto payments provider for your business, it’s important to research how the Web3 payments solution handles reminders and late payment notifications. This can save you hours of follow-up work and help ensure your customers pay you on time each month.

By carefully considering the dunning capabilities of your crypto payments provider, you can streamline your payment collection process and improve your overall experience with crypto payments.

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-based 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 integrates with these services can simplify payment reconciliation and save you time and effort.

Many crypto payment solutions are beginning to build integrations with other financial tools. As a client, you can influence which integrations are prioritized and work with providers to ensure that your business’s needs are met. 

Start Accepting Crypto Payments

One-time and subscription payments are a popular business use case for digital currencies such as Bitcoin, Ether, and stablecoins. If your business wants to accept crypto payments online, in-store, or on mobile, ask these five important questions to properly evaluate the best provider for your needs.