Due to the many benefits it offers, the usage of cryptocurrencies for business is growing in popularity. It can reduce the number of transaction fees that come with using services like Visa, Mastercard, Chase, or central banks. Crypto payments are also processed way faster than bank transactions—a few seconds when banks might take several days. Crypto can also be used as an investment. Bitcoin’s value, for example, has risen over 5,000% since its inception.
When starting to accept crypto payments, it’s important to determine which service to use. One of the most important factors to consider is custody. When using crypto wallets or when accepting payments, you can choose either a custodial or non-custodial solution. Let’s discuss the difference and how the custodial solution by NOWPayments can be beneficial for your business.
- Custodial solution providers keep control and store the funds for their users.
- Benefits of custodial solutions include convenience, lower cost, account access security, and other additional features.
- Businesses can streamline the process of accepting and sending crypto payments by using NOWPayments custody solution.
What is the Custody solution by NOWPayments?
NOWPayments is a crypto payment processing service that offers a variety of tools. Initially, it functions as a non-custodial service, which means users receive money through the processing system directly to their wallet. However, users can store cryptocurrency on their balance within the NOWPayments account by using the optional custody solution.
Custodial services related to crypto payments involve a third party, the payment provider. The custodian keeps users’ private keys and controls the storage of the funds.
Basically, the user deposits or receives funds with the crypto payment processing service. The users can then approve transactions and later transfer the remaining balance to another wallet if necessary, but the funds remain in custody until then.
Custodial services can use hot and cold storage to keep users’ funds. Hot storage is connected to the Internet, and the funds are kept online so they can be used for liquidity and other operational needs. NOWPayments custody works with cold storage, which means the crypto is kept offline. User funds never serve as investments or liquidity, so they are kept safe from any kind of mismanagement.
Using the custody solution by NOWPayments comes with a number of direct benefits for businesses.
Benefits of Custody
- The main benefit of custodial services is their convenience. Instead of managing the keys and balances yourself, you can let NOWPayments do it for you. This makes the entire process of accepting cryptocurrency payments simpler and more streamlined.
- While using non-custodial services, users are responsible for storing their keys. The money kept in the wallet is irretrievably lost if something unexpected happens to the keys or if they are obtained by a third party. With custodial solutions, users can pass the responsibility for storing the funds to the service provider. They are also able to assist in restoring access to the account if it’s lost.
- Operating within the custodian’s ecosystem allows for more features to be used compared to individual custody. NOWPayments provides services like mass payouts, API integration, and guaranteed reimbursement, according to the contract that enables custody.
- Businesses can save on network fees. Instead of paying for multiple transactions with fees accumulating over time and cutting into profits, funds can be kept on NOWPayments balance and be withdrawn all at once.
Which businesses can benefit from Custody?
Any business can benefit from a custodial solution due to the reasons described above. It’s cheaper, more convenient, and includes account storage by the service provider. This saves time and money that can be used for other business needs.
This is also a practical option for those who oversee deposit accounts and frequently distribute funds to numerous recipients. The entire process can be streamlined by using a custodial solution. The mass payout feature can also be used for payroll, making crypto part of the business.
How do I enable Custody?
Starting to accept crypto payments via a custody solution requires a few simple steps:
- First, create an account with NOWPayments. Enter your email address, verify it, and add your wallet address to which payouts will be made.
- After your account is created, open the dashboard. Select Custody on the left-side menu, read and accept Custody Solution user agreement, then click Continue.
- You can then whitelist your IP address which will be automatically displayed at the top. You can also add other IP addresses if necessary. Later on, you can add more IP addresses by getting in touch with [email protected].
- Check the box to confirm your intention to add the aforementioned IP addresses to your whitelist and your acceptance of the risks involved.
- At the final step, you will see a message “Your balances are safe but temporarily unavailable.” The default Custody page will appear within 5 minutes which means you can start using your NOWPayments wallet.
To start receiving payments, you can use tools provided by NOWPayments, which include point-of-sale (POS) terminals, subscriptions, mass payments, donations, and payment links.
Any business can benefit from using cryptocurrency payments and custodial services from NOWPayments. Custodial services come with numerous advantages, including lower costs, faster transactions, and additional features. It’s quick and easy to enable custody after registering with NOWPayments.