Digital Payment Platforms and Cryptocurrency

How we pay for things has changed in the last few decades. The 1950s saw the arrival of credit cards, and the 70s the arrival of debit cards. But things kicked off in the late 90s with internet banking. As we spend more time on smartphones, this has also played a part in payments. Today, we pay our bills online and swipe our smartphones at stores. What's more, we even have digital currencies!

The rise of online purchases saw two problems to solve. On one side is the need to increase security for payment information. And also the need to centralize the various payment methods available. Payment platforms found a way to kill both birds with one stone. Meanwhile, there has also been a strong desire to take banks out of the financial equation. That's where cryptocurrency comes in. This article will explore digital payments and what crypto brought to the table.

What is a Digital Payment Platform?

We’ll start with the basics. A digital payment platform offers two or more online payment technologies. This variety is beneficial for both buyers and merchants. Often payment platforms have payment gateways, payment processors, and merchant accounts. Let’s take a look at what each of these is.

What is a Payment Gateway?

A payment gateway is like an online point of sale. The cloud-based software reads and transfers info from a client to a merchant's account. A payment gateway is a mediator between online transactions and the payment processor.

What is a Payment Processor?

Payment processors are companies or financial institutions. These ventures manage the logistics of accepting debit or credit card payments. When making purchases, the payment gateway sends the information to a processor. The latter is then responsible for sending it to the relevant card network for approval. A payment processor handles transactions between the customers' and merchants' banks.

What is a Merchant Account?

A merchant account is a business bank account. It's what allows merchants to process electronic payments. There are different ways for businesses to request merchant accounts. These methods encompass payment companies, large banks, and independent contractors.

How do Digital Payment Platforms work?

We looked at the essential concepts involved in digital or online payments. Now, it's time to examine how online payment platforms work. Let's begin with the parties involved. First, there's the customer and the business/merchant. Yet, there are gateways, processors, and customers' and merchants' banks.

1. Standard Online Payment Process

Now, let’s look at the standard online payment process step by step:

1. A customer purchases an online product or service and gives the merchant their details.
2. The business/merchant submits the transaction through the payment gateway.
3. The gateway then sends the transaction to the payment processor.
4. The processor verifies and approves the transaction (if it doesn’t, we skip to step 7).
5. The customer’s bank sends the amount to the payment processor.
6. The processor sends the money to the business/merchant’s bank.
7. The payment processor sends the status of the transaction to the gateway. 
8. The business/merchant is notified whether the transaction was approved or declined.
9. The business/merchant receives the money for the product or service sold.

We now know the basics of the online payment process. But how does offering a gateway, a processor, and a merchant account simplify things?

2. Digital Platforms’ Online Payment Process

We’ll look at Braintree to explain how digital payment platforms simplify processes. Also, we’ll look into this payment platform in more detail in the next section. As you can see below, we are jumping from a nine-step process to only five!

1. The front end requests a client token from the merchant’s server and starts the client SDK.
2. The server creates and sends a client token back to the client using the server SDK. 
3. The customer submits their payment info. Then, the client SDK sends that info to Braintree and returns a payment method nonce.
4. The front end sends the payment method nonce to the server.
5. The merchant’s server code receives the payment method nonce. Later, it uses the server SDK to create a transaction.

Top Worldwide Payment Platforms

1. Braintree

This is a full-stack payment platform. This concept means it handles the three main needed techs to process payments. As we know, these techs are the payment gateway, the payment processor, and the merchant account. In consequence, the business process gets much simpler. Yet, you must also set up a production Braintree account to use the platform. Further, you can integrate it through their Drop-In UI or Custom UI. These UIs add a full-featured checkout to your website or app, requiring a few lines of code. 

Regarding coding, Braintree provides libraries in Ruby, Python, PHP, C#, and Java. As well it has SDKs for Android, iOS, and JavaScript. You can take a look at its Github repositories. Further, if you’d like to explore a dev project with Braintree, check out Leadbird! Moreover, Braintree accepts payment through PayPal, Apple Pay, Google Pay, and Venmo. Also, it has MasterCard, and Visa cards enabled for online use. Braintree is available in the US, Canada, Australia, New Zealand, and Europe. Further, it works in Singapore, Hong Kong, SAR China, and Malaysia.

2. Stripe

Stripe also offers a complete payment platform. Also, it prides itself on providing powerful and easy-to-use APIs. Like Braintree, it offers fixed checkout and customization through Stripe Components. Stripe’s features include data security and encryption and worldwide regulatory licenses. Moreover, it has invoice support, client libraries, SDKs, and comprehensive testing tools. Regarding coding, Stripe’s front-end is available in HTML, React, and Next.js. Meanwhile, the back-end is available for Ruby, Node.JS, PHP, Python, Go, .NET, and Java.

You can also find sample integrations and Stripe lbraries for other programming languages. If you want to look over a project integrating Stripe, dive into Capicua’s Showcast! Stripe supports more than 135 payment methods and currencies in 35 countries. The payment platform does not only work online through websites and mobile apps. Also, it has Stripe Terminals at sale points. 

3. PayPal

This prevalent online payment system makes online and in-person purchases. Further, it allows users to send money to friends and family. PayPal is available in over 200 countries and supports 25 currencies. Also, over 30 million merchants worldwide use it! The online and mobile payment platform supports various methods. These include debit or credit cards, PayPal balance and credit, and bank accounts.

PayPal offers a JavaScript SDK for the front-end. This goes with NVP/SOAP APIs or SDKs for Java, PHO, .NET, and Ruby to simplify integrations. While PayPal isn't so customizable, the company acquired Braintree in 2013. As a result, it has a more vast business offer.

4. Alipay

Alipay is an online and mobile payment platform founded in China in 2004 by Alibaba. The platform has over a billion users and processes over 8.5 million daily transactions. Alipay supports online and in-store payments via QR, POS, cash software, and mobile apps. In dev terms, it offers Java, Python, PHP, and .NET SDKs. 

5. Apple Pay

Apple Pay is available in more than 60 countries. Also, stores, through apps, and on the web with credit, debit, and prepaid cards use it. From a dev view, the digital payment platform has JavaScript APIs for the web and the Apple Pay API for apps. You can take a look at its relevant documentation. Apple Pay is quite secure and easy to integrate. It's also known for quicking the checkout process and increasing conversion rates.

6. Mercado Pago

Launched in 2003, Mercado Pago is a growing digital payment platform in Latin America. As the first fintech company in the region, it covers eight Latin countries. Mercado Pago offers point-of-sale, QR, and online payments. These customized methods vary from country to country. It even provides an option to pay in installments in some cases.

Mercado Pago's front-end is in HTML, and its back-end is available in PHP, Java, Node.JS, Ruby, .NET, and Python. Check out its repositories! The platform is an excellent digital payment solution for LATAM countries. That's because options like Apple Pay, Samsung Pay, and Google Pay are not always available. In 2020, Mercado Pago joined forces with PayPal for Mexico and Brazil. Besides standard payment gateway UI, it allows customization with merchants' logos and aesthetics.

What is Cryptocurrency? 

Cryptocurrency is a digital currency type. Furthermore, it's a medium of exchange value with no physical form. These currencies rely on encryption for security. Yet, why does cryptocurrency exist? In the short term, it's a way to cut out the middleman. Instead of going through a bank, you can send payments to the intended receiver. 

Created in 2009, Bitcoin (BTC) is the most famous cryptocurrency to date. Bitcoin's platform provides personal wallets to send and receive bitcoins. Every transaction processed through Bitcoin gets recorded on a public ledger. This blockchain helps verify and confirm transactions through digital signatures. Other popular cryptocurrencies include Ethereum, Tether, and Binance Coin.

Cryptocurrency on Digital Payment Platforms

Many companies accept cryptocurrency in online payments. Some of them are Microsoft, Wikipedia, and Burger King. Moreover, a 2020 HSB Survey found that over 30% of small businesses in the US accept Bitcoin. You can use this search engine to know which enterprises accept digital currencies. Cryptocurrency’s disruption of traditional financial systems has made it very popular. Its total market capitalization was about $2.3 trillion in 2021. This number surpassed fintech companies by about half a trillion dollars. For crypto growth, some reasons are its lower fees, transparency, and efficiency. So, where do cryptocurrency and payment platforms meet, if at all?

Payment Platforms and Cryptocurrencies

Payment platforms are not a rule when it comes to dealing with cryptocurrency. You can use your crypto wallet to operate. Yet, these payment platforms allow for crypto exchanging and wallet management. Moreover, they function as a bridge between crypto owners and merchants. This adds a security layer to those merchants who don’t fully understand or trust this type of currency. That said, cryptocurrency in payment platforms is pretty recent. From the ones we’ve mentioned, only PayPal currently deals in cryptocurrency. Nowadays, it accepts Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. Stripe and Braintree used to accept Bitcoin and are open to doing so again shortly, so we’ll have to wait and see.

Meanwhile, some crypto payment platforms and gateways have different purposes. These are explicitly created to support online payments with this digital currency. We’ll take a look at some of them in the following section.

Top Crypto Payment Gateways

1. Coinbase

Coinbase is one of the largest and most popular crypto payment platforms available. It has traded over $372B in over 100 countries with over 73M users. Coinbase offers a wallet to control your crypto and a Visa debit card to spend it for online payments. You can look at all the crypto Coinbase supports and learn more about how to integrate the platform.

2. CoinGate

CoinGate allows you to trade, accept, list, and buy crypto. The gateway supports over 70 cryptocurrencies and has accrued almost 2M transactions. CoinGate also has an extensive merchant and gift card directory. This feature serves to show you all the options for spending your crypto.

3. BitPay

BitPay is another tool to buy, store, swap, and spend cryptocurrency. The payment gateway offers a Mastercard debit card to handle purchases. BitPay has processed over $5B in crypto through more than 10M transactions since 2011. As of today, it accepts over 13 different cryptocurrencies.

Conclusion

Online payments have revolutionized the way we buy products and services. We moved from cash to cards to the web and mobile apps and even have digital currencies usable worldwide. Digital payment platforms are simplifying and cutting transaction costs. As a result, online purchases are becoming more effortless and convenient. 

Cryptocurrency, on the other side, is revolutionizing traditional financial systems. Further, it's changing how we conduct transactions. It's diving into payment platforms, creating new ones with no "traditional" options. What do you think will happen next? Will we see crypto completely take over? Will traditional currencies and payment platforms disappear?