What is the best way to accept decentralized crypto payments from your customer and community (2022)

The rise of Web 3

For a quick summary, Web 1 (~1990–2005) was about open protocols that were decentralized and community-governed. Web 2 (~2005–2020) was about centralized services run by big tech. Web 3 starts now, which uses the decentralized, community-governed ethos of Web1 with the modern functionality of Web 2. Web 3 is the evolution of the internet, owned by builders and users, governed by tokens.

A centralized platform starts by attracting users to strengthen the network effect, and over time their power over users grow. At the later stage, their relationship with participants changes from +ve sum to zero sum. To grow further, it requires extracting data from users and competing with users. Examples will be Google vs Yelp, Twitter vs 3rd party app. The transition from cooperation to competition becomes a bait and switch. Best entrepreneurs, developers and investors learnt quickly not to build on top of centralized platforms.

Fungible tokens as we know represent a unit of value, this can be stablecoins /non-stablecoins, backed by real assets, algorithmically pegged or are speculative in nature.

Map of the online payments market

The payments market is divided into a few key categories.

Online payment services
Stripe and WePay help businesses with payments-processing online, with the goal of making it more available, secure and less expensive.

Billing automation and streamlining
Zuora and Paymentus to streamline invoicing, automate financial processes and billing.

Point-of-sale payments
Zettle and Revel Systems offer POS products and services, like card readers and digital storefronts.

Personal payment services
MobiKwik and Affirm focus on providing consumers with more convenient payment methods.

Money transfer services
TransferWise and Remitly provide ways to send money across borders quickly and cheaply.

Crypto / Bitcoin payments
Balancesoft, Coinbase and Bitpay use crypto to make payments faster and more secure.

Cryptocurrencies as the new medium of payment

There are benefits associated with crypto payments, such as low transaction fees and speedier processing times. For this, crypto transactions are especially useful for international transfers. With technological advancements such as new high TPS chains, L2 chains, the potential for on-chain payments has improved.

Beyond these, crypto opens up opportunities for the unbanked to make transactions and payments that are irreversible, making chargebacks a thing of the past.

What should be considerations of merchants, content creators and developers regarding crypto payments

Merchants should bear in mind that the custodial of keys should not be held by any centralized party to reduce risks. Also, for a seamless ecommerce experience, low transaction cost and high speed is needed for fast confirmation of payment to the transaction.

Navigating financial regulations and best practices for businesses

Businesses should keep track of where incoming transactions come from (i.e. the transaction hash, the wallet) and the goods/services the payment was used to purchased. In the event of doing financial reporting, one is able to comply and provide the necessary information.

Having trusted on-off ramp partners is essential to any operating business. As much as possible, the business should try to avoid p2p ramps and use the services of a licensed digital token payment provider.

What are the players within the crypto payments space

Coinbase Commerce — Make money when they convert your coins into fiat. Even still, the countries to which Coinbase offers off-ramping to is very limited, mainly US. The chains which they support are mainly the older gen, high gas chains, now the newer efficient ones. Also, they hold your private keys.

Nowpayments — They have multiple integrations with 3rd party platforms. Likewise, they only support the older gen, high gas chains and hold your private keys.

Balancesoft — Highly compliant and does not hold your private keys, supports high TPS chain Solana with strong existing community. Decentralized and easy to get started with.

What businesses are suitable for crypto payments

Cross-border merchants

Cryptocurrencies are global in nature, built to be secure, censorship-resistant, cheap to transact and can settle 24/7/365. This is in comparison to the traditional FX system, where you can only make payments during regular banking hours, even as messages are sent via SWIFT, payments are only settled a few days later.

Transactions can be slow, error-prone, costly and inefficient and costs are usually borne by consumers. For payments amongst non-G20 currencies, settlement times can be long and fees can be anywhere from 5–10%.

Crypt native content creators

Accept crypto payments from your community base that is already familiar with on-chain payments in the most decentralized way possible.

High charge-back businesses

While some chargebacks are legitimate, some have figured a way to abuse this model using the refund technique. This is especially so when the credit card issuer often rules in the favor of the cardholder. Businesses that are labelled as high risk by credit card processing companies need to be contended with higher fees or the inability to get a merchant account.

The usual factors for high-risk categorization are industry type, location the business serves and the type of clientele that is attracted.

Known industries to have high chargeback ratios are:

• Online gambling
• Adult products
• Pharmaceuticals
• Dating services
• Airline tickets
• Tourism products & services
• Telemarketing
• Tobacco products

What inspired Balancesoft

Crypto as a mode of mainstream payment brings many tangible benefits. Businesses can benefit if the onboarding process and user experience are made easy and every transaction is done and recorded in a compliant manner.

Future road map of Balancesoft and how this can benefit your business

Balancesoft currently supports the Solana chain. Going forward, we plan to support multiple chains, some of the users suggested chains are BSC and ETH too, for completeness.

We will do more platform integrations, beyond just the current Shopify to the likes of WooCommerce, Magento, OpenCart, WHMCS etc.

How to get started building on Balancesoft and to get help from us

You can get started easily from our user-friendly Balancesoft Guide. Developer support is provided on our Telegram.