The Mechanics Of Crypto Payments

Aneela Hameed
5 min readApr 13, 2022

The acceptance of crypto payments is growing among retailers, individuals, and businesses. A payment gateway is a simpler way to accept crypto payments than transferring funds manually. It saves you the trouble of manually copying and pasting addresses. A crypto debit or credit card can also be used to make fiat payments with crypto you have in a linked account.

A cryptocurrency payment is a cheap, quick, and efficient method of transferring funds. It is not necessary to use local fiat currencies for international transfers. Payment services are often more intuitive than wallets, and they also offer customer support. In contrast, a payment gateway provides less control, may charge fees, and takes longer to set up than a standard wallet.


Even though crypto is often associated with speculation and investment, it does have another use case: payments. There is a tendency to forget that cryptocurrencies such as BTC, and BUSD are used to transfer value. Businesses as large as Microsoft and Starbucks as well as small businesses have begun accepting crypto payments for their goods and services.

To facilitate the process, this is usually done through a payment gateway. You can even use crypto to pay for items in fiat currency by using a crypto card. Whether you are paying a friend back or purchasing an item, multiple options are possible using blockchain technology.

What is the mechanism of crypto payments?

In its simplest form, a crypto payment involves the transfer of cryptocurrencies from one wallet to another. Manually, you will need the recipient’s public email address. You then use your wallet to copy the address and transfer the funds. Although this process may appear simple, it can be intimidating for newcomers. It is not uncommon for users to make irreversible mistakes, such as sending the wrong kind of cryptocurrency to the wrong address or choosing the incorrect blockchain network. Due to the inability to return a crypto transaction, these usually result in significant losses.

The exact steps vary according to the payment processor, but the general procedure is as follows:

  1. A customer may decide to pay for a good or service, or someone may wish to pay a friend.
  2. Using their payment gateway, the recipient creates a digital invoice for payment. This is usually a QR code that contains the wallet address of the recipient and the amount necessary. At the current market rate, to purchase a $10 (US dollar) meal, you would need $10 of a particular cryptocurrency.
  3. After scanning the QR code with the app, the payer confirms the payment.
  4. The cryptocurrency is transferred to the payee’s account or digital wallet. It only takes a few clicks to complete the entire process. Additionally, it is safer and more convenient than attempting to complete all steps manually.

Cryptocurrency cards for payments

The use of a crypto-linked credit or debit card is another option for crypto payments. Therefore, you can use cryptocurrencies to make payments to the payee even if they only accept fiat currency. You will need to store coins and tokens with the provider of the crypto card to use it. As soon as you purchase something, the cryptocurrency exchange sells your digital assets for the required fiat currency and sends the funds to the purchaser. In some instances, you may also be able to pay off your monthly credit card by using cryptocurrency. The exact terms will vary based on the issuer or financial institution.

Crypto cards can be used in more places than crypto payment gateways. However, unless the friend accepts credit card payments, it is more difficult to pay them directly. Likewise, if the payee desires to receive payment in crypto, then a card will not be suitable. At present, both Visa and Mastercard offer crypto card options through different financial services providers.

Are there any advantages to crypto payments?

You can pay someone in crypto even if you do not use a payment gateway or crypto card. When coupled with a payment system, the experience offers the best of both worlds:

1. Almost any country can use Bitcoin (BTC) and other cryptocurrencies. Whenever you make an international payment, you will not have to convert it into the local fiat currency.

2. Depending on the crypto payments provider, your transactions may be processed almost instantly. When you both utilize the same service, this is most likely to occur. Even if your transaction is not instant, it may still be faster than a bank account transfer and cheaper with fewer transaction fees than a bank transfer.

3. A crypto payments service will have a customer support team that can assist you with any technical issues. Manually transferring funds from a custodial crypto wallet doesn’t usually result in this.

4. For many new users, a crypto payment gateway is easier than setting up and managing a wallet on their own.

What are the disadvantages of cryptocurrency payments?

While the advantages are easy to see, experienced users might find some limitations when making crypto payments:

1. You have less control than setting up a wallet yourself. Many people prefer the traditional experience of having full custody over their crypto. A payment gateway effectively adds an intermediary into the process.

2. Crypto prices can experience high volatility if you’re not using a stable coin. This can make it difficult for the payee to plan their finances accurately.

3. You may have to go through a lengthy sign-up process with KYC and AML checks. While these keep people safe, it’s more effort than creating a wallet yourself.

4. Some payment networks will charge fees for the service they offer.

5. Accepting crypto as a payment method still isn’t widely accepted.

Are there any disadvantages associated with cryptocurrency payments?

Despite the obvious benefits, experienced users may encounter some limitations when using crypto payments:

1. You have less control over the wallet than if you set it up yourself. Many people prefer the traditional experience of having full custody of their crypto assets. Payment gateways add an intermediary to the process.

2. If you do not use a stable coin, cryptocurrency prices can experience high volatility. It can be difficult for the payee to plan his or her finances accurately when this occurs.

3. It may be necessary for you to go through a lengthy sign-up process with KYC and AML checks. Although these can keep people safe, they require more effort than making their own wallets.

4. Some payment networks charge a fee for the service they provide.

5. The acceptance of crypto as a payment method is still not widespread.


Despite the fact that cryptocurrency is often associated with speculation and investment, it does have a different use case: payment. In order to facilitate this process, payment gateways are typically utilized. Crypto cards allow you to pay for items in fiat currency with crypto. With blockchain technology, multiple options are possible, whether you are reimbursing a friend or purchasing an item. A cryptocurrency payment gateway is not an absolute necessity, but it does provide fast service as well as complete transparency.