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How to Accept Crypto Wallet-to-Wallet Payments

In this article, you will get information about how to accept crypto wallet to wallet payments.

There are four ways for Aussie merchants to accept crypto from customers

  1. Wallet-to-wallet
  2. Crypto-enabled credit/debit cards
  3. PayPal – currently available in the USA, (hopefully!) coming to AU soon
  4. Gift cards

What is a wallet-to-wallet payment?

A wallet-to-wallet payment is when a customer transfers cryptocurrency from their cryptocurrency wallet directly to your cryptocurrency wallet.  A wallet is a digital ‘place’ that can store cryptocurrencies.  A wallet is hosted on an exchange like Coinbase or is a ‘hard’ wallet, where cryptos are stored safely offline.

Different cryptocurrencies need different wallets, you cannot store two different cryptos in the same wallet (with some exceptions).

A simple wallet-to-wallet payment between friends involves the receiver sharing their wallet address with the sender.  The sender uses software linked to their hard wallet, or logs into their exchange account to transfer the agreed amount of crypto from their wallet/address to their friend’s address.  After a few minutes, the receiver will be able to see the new amount in their own wallet.

How to accept crypto wallet to wallet payments
Photo by Clark Young on Unsplash

How to use a wallet-to-wallet payment system for accepting funds

It is best practice to use a unique address for each transaction: one per invoice.  This way, each separate payment you receive goes to a separate ‘destination’, effectively quarantining it from your other crypto assets and maintaining the anonymity of your main accounts.

Wallet-to-wallet transactions are simple when everything goes right.  However they are labour intensive for merchants.  You have to give the purchaser your address, wait for them to send the funds, then verify that the crypto has been received in your wallet before you can finalise the purchase for your customer.  If a customer makes a mistake with the address, or if you give them the wrong address, their funds will be lost forever.  They will be upset and you won’t get your funds!

Because crypto wallets are anonymous, there is no way for a customer to check that they are sending their payment to the right place, which can make customers nervous.  Paying refunds are equally nerve-wracking for merchants.

Manual wallet-to-wallet payments are best for low numbers of transactions.

For higher numbers of transactions (without using a custodial service), you could try using a hosted BTC Pay server or host your own BTC Pay server.  To do this, connect the BTC Pay server to your e-commerce website.  This will allow your store to generate addresses automatically and accept payments automatically; the funds are transferred immediately into your hardware wallet and you will not need to re-use addresses.

BTC Pay servers also work for in-person sales at bricks and mortar stores.  To do this, set up a webpage for your customers to use in-store (say on an ipad).  On that POS (point of sale) webpage, set up a storefront on the BTC Pay server.

“Lightning” is another way to manage wallet-to-wallet payments.  However, be warned that the fees for Lightning can be hefty for large transactions.

To track wallet-to-wallet payments in real time, you can use a ‘watch only’ wallet app on your smart phone.  Watch only apps allow you to look at the wallets and generate addresses, but keep your funds safe on a hardware wallet.

Also read how to buy a car with cryptocurrency

Learn more about BTC Pay servers from this video (no affiliation):


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