Converge Logo

Education

Under the spotlight: cryptocurrency payment platforms

By James Tennant

March 2018

5 Min Read

Woman holding mobile phone and credit card whilst checkout out an order on website

There are no two ways about it - if cryptocurrencies are going to go mainstream, there are going to have to be ways for those holding digital currencies to pay for things with them. Rent, bills, services, products, etc. – the sooner we can use cryptocurrencies to pay for these things, the sooner they'll become part of the fabric of life.

But what about the sellers of these products and services? What if they don't want to be paid in cryptocurrency? Right now, that's likely the case for the majority of people. Cryptocurrencies are an unknown. They're exciting but extremely volatile. They're also unregulated, and hacking and scamming is rife. So why would someone with no knowledge or interest in cryptocurrencies choose to be paid with them? The simple answer is, they wouldn't.

But what if there was a way for buyers to pay with cryptocurrencies, and for sellers to receive payment in fiat (Government-backed currencies like dollars, pounds, yen, etc.)? Well, that option exists today, and there's a number of companies and products that offer it.

Today we put the spotlight on several cryptocurrency payment gateways (Bitpay, LitePay, UTRUST, Coinbase, and CoinPayments) and look at how they're trying to solve the problem of actually being able to use cryptocurrencies to pay for things.

Online merchant or cryptocurrency holder? This article will be pretty useful for you.

Not an online merchant? We reckon it's still worth a read!

Overview:

We're going to take a brief look at each payment solution and see how they describe themselves, and what they seek to do. But first, we're going to tell you what they ALL do (there's no point in repeating ourselves, is there?).

Each of the companies mentioned in this article will:

  • Help protect sellers from the dreaded chargeback

  • Convert cryptocurrency payments into fiat

  • Charge low fees (1% or less)

We think you'll agree that each of those features is a big positive. Chargebacks are the scourge of online payments, so protection from them is fantastic. The flexibility to convert cryptocurrency payments into fiat is also welcome (and will bring awareness to all those merchants not currently in the space) as are the low fees for transactions (much lower than PayPal or Stripe).

It seems, then, that the all the payment platforms we look at today have a solid foundation. But it is in their differences that we'll see which offers the best product. At least in our opinion.

Bitpay:

BitPay was founded back in 2011, so it's been around the longest out of all the companies we're looking at today (which definitely counts for something). It was created to make it easy for businesses to accept bitcoin as payment for their goods and services, and they claim to be the largest Bitcoin payment processor in the world, serving merchants across the globe.

Also, BitPay has created the BitPay wallet (giving consumers a toolkit for getting started with bitcoin payments) and the BitPay card (to give bitcoin users a fast way to convert bitcoin into dollars).

It all sounds good on the surface, but there are a couple of things we have an issue with here.

  1. Bitcoin is fast becoming a store of value, not a currency. Today, people are reluctant to use their bitcoin to pay for things as people see it more and more as the digital version of gold. With the price of a bitcoin projected to increase many times over, why would anyone spend their Bitcoin? Remember that guy that bought a couple of pizzas with 10,000 BTC, eight years ago? Well, that much bitcoin is worth around $100 million today. You see what we mean?

  1. There is no mention of buyer protection. When we buy something online, we want to know that we'll get what we paid for, whether that's a service or a product, and we want our money to be protected in case of fraudulent behaviour. This is a big deal with online payments and needs to be addressed.

Why is PayPal so popular? Buyer protection. Simply put, cryptocurrency payment platforms need this.

LitePay:

Charlie Lee is a popular guy. Litecoin is a popular cryptocurrency, and the movement into LitePay is a natural and expected one.

However, there's nothing super special about it. At least, nothing that we can see. LitePay is almost exactly the same as BitPay. Except you replace Bitcoin with Litecoin. 

We can find very little to separate them, other than the currency.

In addition, you can only switch out your Litecoin for dollars, so that's no good for us UK-dwellers, or anyone based outside the US.

The only advantage we see for LitePay is that Litecoin is far cheaper and faster to transact, and works much better as a currency than Bitcoin.

LitePay did just hit the market, so perhaps there's more to come. But for now, in our opinion, it has the same benefits and drawbacks as BitPay.

CoinPayments:

CoinPayments differs from the above because they accept more than one cryptocurrency for payment. In fact, over 160 'altcoins' (any cryptocurrency that isn't Bitcoin) can be accepted as payment using CoinPayments, which is impressive.

CoinPayments can also be integrated with a number of current checkout or shopping cart plugins, which is a nice feature. Add a vault to store coins in, a mobile app to accept payments in person, and integration with BitGo for faster Bitcoin payments and you've got a well-rounded product.

However, there's one major thing missing as far as we're concerned, as there was from LitePay and BitPay – buyer protection.

Coinbase:

Coinbase, the world's most popular online platform for buying digital currency (with over 13 million users!), also has a merchant services arm which is something a lot of you might not have been aware of. We certainly weren't (perhaps to our shame?).

In their own words, “Coinbase provides tools that make it easy for businesses or websites to accept bitcoin payments.”

Now, while Coinbase does allow you to buy Bitcoin, Litecoin, Ethereum and Bitcoin Cash with your fiat currency, its merchant tools only allow you to accept bitcoin payments as a seller. We addressed the issue we had with this when we discussed BitPay earlier in this article.

As one of the biggest players in the world of cryptocurrency, Coinbase likely has a resource advantage over its competitors, but, again, we come back to the same issue – where's the buyer protection?

The cryptocurrency space needs to make people feel comfortable spending and accepting cryptocurrencies for them to become adopted worldwide. The process needs to feel as secure and ordinary as buying from Amazon with your dollars or pounds. Without buyer protection, we won't achieve that.

UTRUST:

Finally, we come to UTRUST.

UTRUST, based out of Zug, Switzerland, and headquartered in Braga, Portugal, have created the first cryptocurrency payment platform that offers buyer protection. I know we keep going on about it, but it really is that important, and it has been missing from cryptocurrency payment platforms until now.

UTRUST also offers very high-speed transactions and zero payment fees if the UTRUST token is used. If it's not, the fees are still low (1%) and, in contrast to a few of the previous payment platforms discussed, UTRUST accepts more than one cryptocurrency as payment (quoting that they accept the most used cryptocurrencies on the market).

Immediate crypto-to-cash settlements protect the sellers against the volatility of the cryptocurrency market, and performance-based ratings will ensure buyers transact with reputable sellers, reducing purchase risk.

Once you put all of this together, we think it becomes fairly obvious that UTRUST has taken cryptocurrency payment platforms a step or two further than the competition, with the buyer protection aspect appealing most of all.

Visuals always help, don't they? So, with that in mind, we've created a table below that quickly highlights the differences and similarities between each of the options.

For us, UTRUST is the company offering the most comprehensive product, and we think the table above highlights that.

If this article has whet your appetite for information on cryptocurrencies and the blockchain, then check out our beginner's guide to the blockchain by clicking below.