The cryptocurrency industry is actively developing, constantly creating not only new technologies but also new terms to describe them. This article is written for those who want to accept crypto payments but need to familiarize themselves with the Brave Crypto World. We have collected the top necessary concepts and definitions to help you understand the basics and make accepting crypto payments seamless and understandable.
- For crypto payments, it is necessary to know and understand a lot of terms. So, for your convenience, we have created a small dictionary to help you sort things out.
- Having understood the concepts, you can independently configure the acceptance of crypto payments with NOWPayments. We provide various integration tools that will cater to your needs.
It is a new-generation currency based on cryptographic encryption algorithms and, in particular, blockchain technology. Many believe that thanks to its qualities and new technologies, this currency will become the next evolutionary round in the financial system, replacing traditional fiat money.
Decentralization, privacy, and reliability are the three big pillars on which this belief is based. Cryptocurrency has a wide range of applications, including allowing you to accept fast and cost-effective borderless payments.
This is the traditional money we have in circulation today: all state currencies, such as the euro, dollar, rupee, and others. Fiat money is not backed by anything other than the power of the state that issued it. Thus, fiat money is a currency the government has declared a legal means of payment. The government guarantees that fiat money can be exchanged for real goods or services at any time. Fiat has no collateral, but it has a certain purchasing power, thanks to the state’s laws.
A wallet is an application for storing cryptocurrency. It allows users to access digital assets, transfer them to other addresses, and use them for payment and other purposes. There are several types of wallets. Cold or hardware — wallets in the form of a separate device, similar to a USB flash drive.
Browser wallets are wallets that are embedded in the browser as an extension. Desktop wallets are special applications installed on a computer. Exchange wallets are wallets that users receive by opening accounts on exchanges for trading cryptocurrency. Finally, mobile wallets are an application for your smartphone that allows you to manage your crypto assets on the go.
This is the number of your wallet and its details according to which the transfer of coins is carried out. For example, merchants must specify their BTC address to receive payments in Bitcoin. The address consists of a random set of numbers and letters automatically generated by the wallet. The crypto address is inserted into a special field when conducting a transaction. At the same time, it is necessary to take into account the case. Therefore, it is better to copy the address through the clipboard because if there is an error, the transfer will not occur, and the coins will be lost.
Crypto payment gateway
The gateway can be a custodial one that stores the merchant’s profit and a non-custodial one that only processes the payment using encryption technologies and directs the profit directly to the merchant’s wallet. In addition, the crypto payment gateway allows merchants to accept crypto payments and settle in fiat (and vice versa).
To begin with, what is a plugin? A plugin is a small program code that complements the functionality of the main application for which they are created. Simply put, these are add-ons or fixes, thanks to which the source program becomes better (more functional) from the point of view of a particular user. The peculiarity of plugins is that they cannot work independently; they are only add-ons that work inside the main program, in the case of crypto plugins for CMS platforms. These add-ons allow you to supplement the functionality of your e-commerce store and accept crypto payments from your consumers.
The transaction fee is charged when transferring a certain amount of cryptocurrency from one wallet to another. The transaction fee is flexible and may vary depending on the workload of the blockchain. The blockchain network is a chain of blocks consisting of confirmed transactions.
And the blockchain network fee is a fee the sender pays for making a payment in cryptocurrency. The fee is mandatory and performs two crucial functions:
- It goes to support miners/validators who help process the payment and confirm transactions in the blockchain.
- It is essential to ensure the network’s security and protect it from spam attacks.
A service fee is a fee charged by the crypto payment gateway for accepting and processing crypto payments. The service fee can be fixed or floating. Most crypto payment gateways motivate merchants to use their service by reducing the fee if a certain targeted payment volume is reached. In addition to the standard service fee for payment processing, a crypto gateway can charge fees for additional services. For example, an additional fee is charged if a cryptocurrency exchange is required (for example, you want to accept BTC, and your customer has made a payment in ETH). In addition, the crypto processor charges a fee for crypto-to-fiat and fiat-to-crypto conversion.
API keys are encryption keys for authenticating a user in the system, similar to a login and password. As a rule, API keys look like a long string of different characters. This makes it difficult to crack the keys. When you enter API keys, a request is sent to the server. If there are no problems with identifying the request, the program starts receiving data from the server. API keys allow you to connect third-party programs to websites or exchange information between services.
How it works. The merchant creates API keys in the personal account of the payment provider. Then the merchant enters a key into the settings fields on their CMS platform and connects to the gateway. The merchant gets the opportunity to accept crypto payments in their online store through a third-party application.
IPN (Instant Payment Notification) is a technology that automates payment processing. Its essence lies in the seller receiving an alert when payment events occur (payment, payment error, subscription creation, etc.). IPN for the same transaction can be sent more than once. For example, if the payment was delayed for some reason, the first IPN will be transmitted immediately after the payment. Then, after the payment is completed, a second IPN will be sent.
The IPN key is an automatically generated unique set of letters and numbers used to configure receiving notifications about changes in payment statuses.
How to accept crypto payments?
NOWPayments provides merchants with several state-of-the-art tools with which they can accept crypto payments. Depending on the type and direction of your business, you can choose one of the integration tools:
Invoices. Suitable for business owners who want to accept fast and cost-effective crypto payments. The invoice is a small box that contains all the necessary information to complete the payment. You only need to generate an invoice once and send it directly to your customers or place it in your store.
API. Suitable for merchants who develop their store on an independent platform, website, or application. With just a few lines of code, you will be able to accept 100+ coins for payment. In addition, our crypto API allows your customers to pay for one purchase with different cryptocurrencies (for example, part with USDT and part with BTC).
Billing. A perfect set of tools for businesses that allow you to receive recurring payments. These tools will easily allow you to request and receive payments from your customers in 150+ cryptocurrencies within a given period.
Plugins. An add-on to your online store with the help of which you can accept crypto payments. NOWPayments provides plugins for major CMS solutions: PrestaShop, WooCommerce, Magento 2, WHMCS, OpenCart, Ecwid, Zen Cart, Shopify, and Shopware. To set up the acceptance of crypto payments in your store, follow the instructions below:
- Log in to your NOWPayments account or create a new account.
- Add your payout address.
- Generate an API key.
- Generate an IPN secret key.
- Select and install the required plugin.
- Log in to your merchant account and navigate to the store settings.
- Upload the plugin.
- Add your API and IPN keys.
- Save the changes.
- Get profit!
With NOWPayments, you can start accepting borderless crypto payments in minutes. Thanks to a short but comprehensive dictionary of terms, we hope you won’t have any questions. However, we are always happy to help if there are any left!