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How to integrate cryptocurrency payments in an app?

Crypto

How to integrate cryptocurrency payments in an app?

July 22, 2022
, by 
Mateusz Raczyński

As crypto gets more and more popular, you might want to consider accepting it in your app. But what does it take to do that? Let’s explore in this article.

In 2010, when one wanted to order a pizza with his Bitcoin, he had to go to great lengths. Since no business accepted cryptocurrencies, he’d have to find another person who would buy that pizza with cash and get the appropriate amount of BTC sent in return to his wallet.

That actually happened and Laszlo Hanyecz, an early bitcoin miner, paid 10,000 BTC for two large pizzas, brought to him by a fellow bitcointalk.org member. We all know how it turned out for him and for Bitcoin, but in those early days, that was one way to find out whether you can buy anything with the magic internet money.

Today, we’re way further down the road and there are numerous solutions that can allow businesses to embrace cryptocurrencies and accept payments with them.

And if you wanted to be one of them, how to integrate cryptocurrency payments into your app, ecommerce business or any other type of idea that you have?

Here’s what it takes to do so.

How to accept crypto payments?

Let’s give you an idea on how to do it by first laying out the choices that you have.

  • Off-chain integrations with 3rd party providers – Custodial

This is the most out-of-the-box solution that would help you accept crypto payments on Shopify, WooCommerce or any other platform that you’re using for facilitating online sales. On the development side, that’s often similar to integrating with a standard payments provider such as Stripe–it’s just another external tool that needs to be built into your app or ecommerce business.

Third party integrations have most of the headaches of facilitating crypto payments on them, but that comes at additional transaction fees. The good news is that they’re still often cheaper than the usual 3% fee for credit card payments.

  • Off-chain payments through APIs – Custodial & Non-Custodial

Another option that you have is still off-chain, but with a greater level of flexibility and potentially limitless customizations. Most public blockchains have open-source API endpoints that allow for facilitating transactions through the code–some of them are free to use while others require additional costs, i.e. for additional performance, number of requests per day, SLAs, support, etc. With APIs, you can initiate a transaction off-chain and perform the next action (such as sale of the item), based on what the API returns (i.e. sale after the transaction had been received in your wallet).

  • On-chain transactions – Non-Custodial

When designing with crypto payments, you can always make the decision to build a completely decentralized checkout. That involves limiting to one blockchain type and building the whole application with that chain in mind, adjusting to its specifics, etc.

For ecommerce and apps that aren’t dedicated to crypto natives, this choice is most likely unreasonable as it extends the development process and adds complexity to the project, considering the end-user. However, it’s a natural choice for most NFT marketplaces and Web3.

Why would you consider crypto payments?

Knowing all the routes we can take, let’s explore each of them in detail–how would the development look like in each case and what are the pros and cons to consider. But before we jump into answering these questions, let’s review on why you might want to enable crypto in your business in the first place.

Lower transaction fees

A solid reason to research cryptocurrencies as a payment method in an app is cutting down on costs. That won’t suit all cases, though.

Apple charges about 30% fee for in-app purchases on iOS apps. Google has a similar approach, but their service fee is slightly lower. It would be 15% each year and sub-$1 million earnings, and then 30% after surpassing that limit. 

If you’re using the app to sell real-world goods and services, then you might also implement Apple Pay or Google Pay which don’t require any additional fees except those of credit cards. Those can be a headache when operating on small margins – that’s usually 2-3% per transaction.

With crypto, the fees are usually around 1% with existing solutions, or can be as low as almost 0 if done on-chain. For example, on Algorand, each transaction costs $0,00034 as of the time of writing. It will be high on Ethereum (around $10-30), but that doesn’t change if you’re selling more expensive products. A $10 fee for a $10,000 high-end furniture is negligible.

Attracting new clients

Adding cryptocurrency payments can bring in new clients just for the sake of curiosity. The crypto crowd is getting bigger and bigger each year–or should I say, each bull market–and they might want to spend their crypto without selling it on exchanges for fiat.

This is where you, as an app or store owner, can answer the needs of a rapidly growing community.

Adding new payment method

Offering too much choice can overcomplicate your payments but on the other hand, by offering more payment methods, you can serve more customers that are using different banks or payment platforms or cryptocurrencies.

Standing out in the market

Let’s face it–accepting crypto is still not as much popular in 2022 as we’d like. That’s an opportunity, though, especially if it suits your brand to be more tech-savvy. By accepting crypto you’re showcasing your business as more forward-looking, geeky, technical and futuristic. It’s a great combination to communicate your brand’s values as well as setting it apart from the competitors.

No chargebacks

Chargebacks can be a pain since they add costs, penalties and wasted labor on reviews, complaints, audits, etc. With crypto, the transactions are irreversible and settled quickly (a few seconds up to an hour, depending on blockchain), so the purchases should be taken with extra care. 

Cross border payments

Serving customers worldwide is great to scale your business, but the exchange rates between currencies can consume significant amounts of money. With crypto payments, the exchange rates are bundled within the usual ~1% transaction fee.

Tipping systems

Following Twitter, you could use crypto payments to receive tips for your work. For crypto native users, it’s as simple as scanning the QR code and confirming the transaction.

Setting up a crypto wallet

Before we dive into how to accept crypto in your app and business, if you’re new to it, you’d have to set up a wallet in order to receive crypto transactions.

In almost all the cases, there are two options to receive crypto-related payments. It’s either:

  • Conversion at the checkout, receiving fiat currency to bank account
  • Receiving funds to the merchant account, withdrawal to either crypto wallet or bank account
  • Receiving digital assets to a wallet. That can be either a custody wallet managed by the payments provider or own wallet with unique private keys.

As the first two options are the usual way of doing online business transactions, setting crypto wallets might be new to some of the readers.

We won’t focus on how to setup a wallet exactly, but let’s give you an overview of what the process consists of. On most blockchains, there are several wallets available. Setting it up means creating an account that will have its own public key–an address to receive transactions to, and the private key which is the seed phrase (12 or 24 words) or a file, for example a JSON file–or both. This seed phrase should be created on a secure computer and stored in a secure location as anyone who obtains it gains total control over the assets held in the wallet.

What does it take to accept crypto payments on Shopify, WooCommerce, or in any other app?

There are plenty of available options when it comes to 3rd party solutions. They are best suited for ecommerce owners but will work in other cases, too. The implementation is quite straightforward as they are well-documented and offer support services. 

If you’re the less technical owner, the only thing you need to know is that there is some customization required and the plugin has to communicate well with the rest of your app or website, but in the end, it’s not that hard for mid-level developers, nor should it be costly.

The downside is, you’ll often have to cope with the provider’s branding and have less potential for customization. The payment is often as simple as scanning the QR code with wallet app on the buyers end and receiving digital assets or fiat to the merchant’s account.

Among the best crypto payments providers, you have:

  • PayPal – if you haven’t noticed it yet, PayPal added ‘Checkout with crypto’ feature in 2021. It allows users to pay with their crypto holdings, however, the transaction itself is settled in USD and this is what you’ll receive. The feature only supports cryptocurrencies held in PayPal accounts
  • Coinbase Commerce – Coinbase adds a simple but powerful crypto checkout feature. It supports 10 cryptocurrencies including BTC, ETH, USDC and USDT, offers API integrations, invoicing, and works directly with Shopify and WooCommerce. There are two options–Self-managed and Coinbase managed, both at 1% fee, but the latter only works in the US.
  • Crypto.comone of the largest crypto exchanges offers a payment solution for merchants. It supports BTC, ETH, USDC, and CRO crypto and allows payments from other wallets. The sales are settled to Crypto.com Pay Merchant Account and then can be withdrawn to the preferred wallet or bank account.

Source: crypto.com

  • BitPayone of the first Bitcoin payments solutions that now supports over 12 cryptocurrencies. While the users pay with crypto, the sellers are paid in fiat currencies, reducing the risk of volatility.
  • StrikeStrike is another payment platform that you could integrate with your app. It supports Bitcoin transactions through Lightning Network and is the provider behind Twitter tips feature.
  • OpenNodethis is another Bitcoin and Bitcoin Lightning payment gateway that supports BTC/USD conversion at the time of payment.
  • DePaya powerful solution that supports peer-to-peer Web3 payments. DePay works with ETH, BSC, and Polygon blockchains and any token that is built upon them and has liquidity on DEXes. Contrary to other solutions, this is a smart-contract-powered solution.

API integrations for crypto payments

Integrating crypto payments through a dedicated API requires more technical knowledge and understanding of some blockchain specifics. Most of the providers mentioned above allow for API integrations that allow you to set up invoicing, When choosing the provider, you should look to whether the API supports the whole transaction process or has a limited functionality.

A big advantage of APIs is the control over the user experience. It can be directly built into the app’s interface which makes the flow undisturbed and could lead to higher conversion rates. The control over the platform’s look and feel also makes the brand image more consistent. 

However the most important feature is that API integrations can be endlessly customizable and work as a part of a larger system, based on certain rules. This suits trading games, contests with crypto prizes, etc. For non-ecommerce apps that might be the best solution–especially for web apps that don’t have to follow Apple’s and Google’s guidelines regarding payments. With APIs, you can even sign blockchain transactions, keeping the whole application simple and centralized while leaving only the settlement part to be done on-chain.

Among popular solutions for crypto APIs, there is CoinRemitter and PureStake which we have used in OpenNFT.

Enabling on-chain, non-custodial payments

Payments can also be facilitated in a 100% crypto native way. This is great for Web3 projects although it might be the most complex to build. Especially, if you want to use a cryptocurrency & blockchain that are not supported by most of available solutions.

Having to build the whole system from scratch means that you have to provide all the elements needed by your team. That includes:

  • wallet integrations
  • server/database
  • smart contracts to facilitate the trades
  • fiat prices from 3rd parties (i.e. Binance API) – if needed
  • running extensive tests
  • in ceratin cases, smart contract audits
  • Testnet & Mainnet setup
  • gas fees optimization
  • and many more, specific to your case

As you can see, there is a lot that needs to be taken care of. It’s much simpler with using existing solutions but if they don’t answer your needs or you’d like to cut transaction fee costs with a larger upfront investment, building a dedicated payments gateway is the way to go.

Other considerations

Of course, crypto is still relatively new and there are some other considerations to be taken into account. One is the tax aspect. If you accept crypto but the settlement is made in fiat currencies, nothing really changes but if you obtain crypto as the effect of sales, you might need to pay capital gains tax, but it’s different among parts of the world. Crypto also means volatility, so after the sale the asset value might go down or up significantly. The last aspect to consider are the regulations that are still largely unclear. This will eventually fade away as governments give clearer standings on how should crypto be regulated, but as of now, that’s a risk factor.

Want to accept crypto in your business?

I hope you’ve got more clarity on how can you accept crypto in your ecommerce or an app after reading the article. This is a great way to open up to new clients and show your brand as more tech-savvy.

If you need help with adding crypto payments to your app or you have an idea that needs to be developed from scratch, don’t hesitate to contact us! We build such projects end-to-end, from the design & ideation to development & smart contracts.

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