Digital payments have become crucial for the modern economy, with the eCommerce sector conquering the forefront of the retail industry and becoming a global juggernaut. Finance and similar industries have also gone primarily online, serving their customers without regional limitations. Naturally, the role of crypto in this development is massive and grows every year since the virtual currency payment options are much less expensive and time-consuming than fiat.
But which cryptocurrency payment methods are best for you to integrate as a business? While there are many no-brainer choices on the market, the Ethereum payment method prevails as a dominant choice in this competitive market due to its numerous benefits and unique features.
This piece will analyse the reasons why you should accept Ethereum payments and outline the specific process behind integrating the Ethereum payment gateway.
Why Ethereum Stands Tall as a Second Largest Network
Since its initial launch in 2014, Ethereum has been a steady number two behind the world’s largest cryptocurrency — Bitcoin. Despite being closely tied with the flagship currency, Ethereum occupies a different niche.
Ethereum’s main goal was to develop the concept of smart contracts in the cryptocurrency payment field, paving the way for businesses to automate their payment system, set virtual contracts and build custom solutions for their operational needs.
Currently, Ethereum still leads the charge in the smart contract sector, offering the most comprehensive and accessible smart contract ecosystem in the industry. Ethereum has even developed a custom programming language, Solidity, for smart contract development, elevating the simplicity and accessibility of its infrastructure.
As a result, the Ethereum network remains the leader in the utility-oriented niche of blockchain networks. With such a strong foundation, Ethereum’s valuation is naturally very high and experiences far less volatility than other altcoins on the market.
Reasons to Accept Payments in Ethereum
Ethereum’s firm footing in the crypto industry has set the foundation for ETH currency to thrive in the modern market. Numerous crypto owners across the globe have chosen Ethereum as a go-to coin for cryptocurrency payments due to its unique mix of stability, value, and secure transactions. Let’s explore the full extent of Ethereum's payment processing benefits.
Optimised Commission Fees and Payment Processing
Compared to traditional payment methods using fiat currency, Ethereum's payment service is exponentially cheaper. The difference is felt even more on the international scale, where fiat payment gateways all have to go through the SWIFT system. The SWIFT protocol is a conventional way of transferring fiat finances, creating an intricate web of central banks and commercial banks that verify transactions independently.
Most payments have to go through at least three distinct checks and even more on average. As a result, SWIFT payments take at least 24 hours or several business days to process, with each bank taking its share of the transaction costs.
Ethereum’s decentralised system doesn’t require such a lengthy and complex process to verify the payment process. Since there is only one check, the transaction fees are considerably lower in the ETH payment gateway, and the processing speed is between several seconds and minutes. While Ethereum sometimes suffers from occasional congestion problems, its average processing time is still much lower than that of its fiat counterpart.
Smart Contract Functionality
As outlined above, smart contracts have steadily remained Ethereum’s primary attraction, infusing crypto payments with automation capabilities. Initially, smart contracts were designed to simplify processing payments, but they have quickly expanded in utility and value. Today, smart contracts can generate custom agreements between parties that are honoured automatically, leaving no room for manipulation or counterparty risks.
Smart contracts also have numerous use cases in other industries, including healthcare, banking, supply chain management, logistics, manufacturing etc. This indirect benefit of the Ethereum network has incentivised numerous businesses to adopt ETH as a primary cryptocurrency payment solution.
The Ethereum team is working to elevate the use cases and applications for smart contracts further, which will inevitably aid the ETH currency in becoming even more popular in digital commerce.
The Trade-offs of Accepting Ethereum as Payment
While Ethereum payment solutions present a potent combination of security, utilities, fast processing and affordability, there are some factors to consider on the other side.
First and foremost, the Ethereum network has grown tremendously in the last decade, resulting in congestion problems due to scalability issues. Ethereum has introduced layer-2 solutions to alleviate the overload problems, but these solutions have failed to produce measurable results.
Due to these circumstances, Ethereum can sometimes be an uneven payment gateway, providing inconsistent processing times and occasionally bloated transaction fees. Ethereum’s price should also be considered carefully, as it fluctuates significantly during bull runs and bear markets. While Ethereum maintains a steady price compared to other digital currencies, it is still highly volatile against the established fiat alternative.
Ethereum’s strong suits easily outweigh these shortcomings, but prudent businesses should still be aware of the complete picture when choosing cryptocurrency payment gateways.
The Process Behind Integrating Ethereum Payments API
Several years ago, adopting Ethereum payment channels required a massive business investment. An average company must hire a full development team and adopt many software tools. Even after that, a payment gateway based on Ethereum would still be a lot of trouble due to the maintenance complexities.
Luckily, today’s situation is completely different, thanks to the invention of accessible payment gateways and readily available digital solutions. However, the process is still far from being trivial. Let’s explore.
Do Your Research on the Ethereum Payment Gateway API
The first step in the integration process is finding an Ethereum payment processor that works well with your existing ecosystem and comfortably meets your payment volume quotas. You have three distinct options: in-house gateways that you have to develop yourself, provider partnerships processing, and open-source alternatives.
In-house options are too expensive for average companies, as they require a dedicated department of IT specialists. The open-source Ethereum payment gateway is on the other side of the spectrum, as it is a completely free option. However, open-source solutions are often buggy, unreliable, and devoid of security features. They also lack proper documentation, which can cause a lot of confusion during the integration process.
Finally, gateway providers are the balanced option for small and mid-sized companies, as they offer diverse currency options, competitive transaction fees and optimal processing times. White-label gateways are not as customisable as in-house solutions, but they can easily satisfy the needs of average companies with digital platforms.
When selecting a white-label provider option, check the Ethereum payment request times, as it will determine how fast you can retrieve customer funds and give them respective products or services. Additionally, it is crucial to have pricing options, wallet integration capabilities and a direct transfer channel to your bank account. A proper gateway should accommodate all popular wallet choices and have an effective money distribution system for your business account.
Integrate the Payment Option in the Back-End and Front-End
Finding a proper payment gateway will only prove successful if you integrate the APIs seamlessly within your tech stack. Fortunately, gateway providers mostly help companies with this step, offering a ready-made API solution that automatically connects with their payment system.
However, it is still important to check the integration's performance and monitor the effect of the new API connection on your existing ecosystem. In rare cases, APIs could cause the entire system to slow down.
On the front-end side, providing a convenient payment option for users is essential. Setting up convoluted menus and multiple confirmation steps is highly discouraged, as these complex steps can scare off a lot of customers on your website. Users should be able to complete the transaction within three steps and several seconds to maximise their level of convenience. Naturally, this doesn’t mean you should compromise security and authentication steps for the users' comfort. Finding a good middle ground is advisable by implementing swift 2FA checks or similar verification methods.
Provide Wallet Connections for Users
Users who conduct Ethereum payments online usually use popular wallets like MetaMask, Coinbase or Exodus. However, there are dozens of other popular options on the market which you should consider. As a rule of thumb, having as many wallet connections as possible is a plus for your cryptocurrency payment systems. After all, some lesser-known wallets might become popular, and your company will benefit from being an early adopter.
Customers shouldn’t experience any problems with connecting their wallets to your platform. So, conduct thorough checks before launching the Ethereum payment option and assess how efficiently it will work with average users. Payment gateway providers mostly deliver a smooth wallet connection system, but extra checks can help you identify any potential issues with integration.
Develop a Pricing Scheme
In most cases, companies mainly connect their Ethereum acceptance rate with live order books to provide the fairest options to their clients. However, in specific cases, it might be more prudent to get a fixed rate, especially if your respective order books are experiencing slippage issues.
Some companies alternate between the two approaches depending on market conditions. For companies unfamiliar with Ethereum's movements and general crypto price trends, it is advisable to start with the variable pricing scheme. However, with enough experience, you can start fixing the ETH rate to maximise your profitability.
Set up a Seamless Withdrawal System
Any business owner who accepts Ethereum as payment on their platform will tell you that crypto-to-fiat conversion is a considerable challenge if set up poorly. Since there are no standardised exchange options for crypto and fiat currencies, the entire process might be inconsistent with exchange rates and processing times.
With a poor crypto-to-fiat conversion system, your business will miss out on potentially significant liquidity channels, which might be a problem in some industries. After all, having instant access to your liquidity funds is always optimal, and premier crypto-to-fiat conversion options will help you achieve this condition.
Payment gateway providers often deliver crypto-to-fiat solutions, but you might have to integrate them separately if the current option is subpar. If obtained independently from the gateway API, crypto-to-fiat tools should be checked for efficiency and speed of execution.
Assess the Performance and Speed of the Gateway API
Once set up and launched, the Ethereum gateway will require considerable attention and maintenance work. You should regularly monitor how well your cryptocurrency payment gateway works in light of changing customer volumes. Some gateways might experience scalability issues once you reach a certain threshold of active crypto payers. If this happens, it might be time to re-evaluate your gateway partnership and consider new options in the market.
Additionally, your gateway system might experience other technical issues unrelated to scaling. System errors, bugs and breakdowns are not uncommon with any software. So, you must conduct regular audits to check the integrity of the gateway protocol. Third-party specialists can help you automate the audit process, which can be a great decision if you can find an affordable supplier.
Final Thoughts — Is Ethereum Gateway Integration Worth it?
Ethereum has established itself as the second most popular and reliable currency outside the stablecoins. Ethereum’s reach, value, and extent of utility are unrivalled in the current crypto landscape. So, adopting an Ethereum gateway is a no-brainer for companies that consider crypto payment solutions.
Thanks to the latest improvements in API technology and white-label software, setting up an Ethereum payment option is much smoother than before, and any average company can complete this process without significant complications.
However, you should still carefully monitor some factors, including the pricing scheme, the performance of payment processing, and the crypto-to-fiat conversion efficiency. After all, payment solutions are only effective when they benefit both sides of the deal.
