TL;DR (SUMMARY)
Cryptocurrency payments are increasingly accepted by retailers, individuals and businesses. While you can transfer funds manually, payment gateways provide an easier way to accept cryptocurrency payments. This saves you from manually copying addresses and making mistakes. You can also use a cryptocurrency debit or credit card to make fiat payments with the crypto you have in a linked account.
Cryptocurrency payments provide a cheap and fast way to transfer funds. It is not necessary to use local fiat currencies to make international transfers. A payment service will often be more intuitive than a wallet and also has customer service. On the other hand, a payment gateway provides less control, may charge fees, and takes longer to set up than a standard wallet.
You can start making cryptocurrency payments using Binance Pay. The service is available to all Binance users with a cryptocurrency wallet, and charges no fees. Once you set up your account, you can start making payments to any other Binance Pay users or supported retailers. You can also request a free Binance Card if you prefer to make payments by credit or debit card.
Introduction
Although cryptocurrencies are famous for speculation and investment, they have another use case: payments. It's easy to forget that people use cryptocurrencies like BNB, BTC, and BUSD to transfer value. Large retail stores, such as Microsoft and Starbucks, and small businesses have begun accepting cryptocurrency payments for their goods and services.
This is usually done through a payment gateway to simplify the process. You can even use cryptocurrency to pay for items in fiat currency with a cryptocurrency card. Whether you want to send money to a friend or purchase an item, there are multiple options that use blockchain technology.
How do cryptocurrency payments work?
At its simplest level, a crypto payment transfers cryptocurrency from one wallet to another. To do this manually, you need the recipient's public address. Using your wallet, you copy the address and send the funds. While this sounds easy, the process can be complicated and intimidating for beginners. It is not uncommon for users to make irreversible mistakes, such as sending the wrong type of cryptocurrency to a certain address or selecting the wrong blockchain network. Since there is no way to return a cryptocurrency transaction, significant losses often occur.
To help make the process foolproof, cryptocurrency service providers like Binance have created more intuitive crypto payment methods. These gateways turn a complicated process into one that can be done in just a few seconds. The exact steps differ depending on the payment processor, but the usual method is as follows:
1. A customer decides to pay for a good or service, or someone wants to send money to a friend.
2. The recipient creates a digital invoice to receive payment through their payment gateway. This is usually a QR code containing the receiving wallet address and the amount needed. For example, purchasing a $10 meal would require $10 of a specific cryptocurrency at the current market rate.
3. The payer scans the QR code with the app and confirms the payment.
4. Cryptocurrencies are transferred to the beneficiary's digital account or wallet.
This entire process can be completed with a few clicks. It is also safer and more convenient than trying to do all the steps manually.
Crypto cards for payments
Another option for cryptocurrency payments is to use a crypto-linked credit or debit card. This way, you can make payments with cryptocurrencies even if the beneficiary only accepts fiat. To use a crypto card, you will need to store coins and tokens through your card provider. When you buy something, the cryptocurrency exchange sells your digital assets for the required fiat and sends it to the beneficiary. In some cases, it is also possible for you to pay your monthly credit with cryptocurrencies. The exact terms will change depending on the issuer or financial institution.
Crypto cards can be used in more places than payment gateways. However, it's harder to pay a friend directly unless they accept card payments. If the beneficiary wants to receive their payment in crypto, then a card is also not suitable. Both Visa and Mastercard currently offer crypto card options through different financial service providers.
What are the advantages of cryptocurrency payments?
Paying someone with cryptocurrency has advantages even without using a payment gateway or crypto card. When combined with a payment system, the experience has the best of both worlds:
1. Bitcoin (BTC) and other cryptocurrencies can be used in almost any country. This saves you from having to convert to local fiat currency when making international payments.
2. Depending on the crypto payment provider, your transactions can be completed almost instantly. This usually happens when both use the same service. Even if your transaction isn't instant, it can often be faster than a bank account transfer and cheaper with fewer transaction fees.
3. A cryptocurrency payment service will have a customer support team to help you with any technical issues. This is usually not the case when you transfer funds manually with a custodial crypto wallet.
4. A cryptocurrency payment gateway is, for many people, easier to use than setting up a wallet and managing it.
What are the disadvantages of cryptocurrency payments?
While the advantages are easy to see, savvy users may encounter some limitations when making cryptocurrency payments:
1. You have less control than setting up a wallet yourself. Many people prefer the traditional experience of having full custody of their cryptocurrencies. A payment gateway certainly adds an intermediary to the process.
2. Cryptocurrency prices can experience high volatility if you are not using a stablecoin. This can make it difficult for the beneficiary to plan their finances accurately.
3. You may need to go through a lengthy registration process with KYC and AML checks. While these verifications keep people safe, it requires more effort than creating a wallet yourself.
4. Some payment networks will charge commissions for the service they offer.
5. Cryptocurrencies as a payment method are not yet widely adopted.
What is Binance Pay?
Binance Pay is a cryptocurrency payment service offered to all Binance users. It offers a borderless and contactless way to quickly transfer and receive cryptocurrency. To send cryptocurrency you only need someone's email, cell phone number, or payment ID. You can also create a QR code that specifies the amount, cryptocurrency, and a message to send to the beneficiary. Binance Pay also has a list of merchant stores that accept payments through this service.
How can I use Binance Pay?
If you already have a Binance account, head to the Binance Pay tab. You will be prompted to create an alias for the service before you begin making and receiving payments.
The [Send] tab will allow you to make payments using an email, mobile phone number, or payment ID. The [Receive] tab will display your personal QR code, plus the option to customize it for your specific transaction. For more detailed instructions, see our FAQ on How to send cryptocurrency to someone via Binance Pay.
Use a Binance Card
If you want to pay for your daily fiat purchases with cryptocurrencies, a crypto card is your best option. You can register for a free Binance Card Visa with your Binance account, as long as you have completed the required KYC and AML verifications. To use the card, you simply transfer the cryptocurrency you want on the card to your funding wallet. When you make a card payment, the cryptocurrency will be sold for the local currency you are paying in and transferred to the provider.
Conclusions
Since the first famous real-world pizza purchase for 10,000 BTC in 2010, people have been using cryptocurrencies to make payments. More than ten years later, we have moved from a manual process to integrated digital currency gateways offered through FinTech banking and crypto services. If you want to start experimenting with cryptocurrency payments, check with your crypto exchange to find out what services they offer.
