General

What It Is, How It Works, and Benefits


What Is Coinbase Commerce?

Coinbase Commerce is an enterprise digital payment service offered by cryptocurrency exchange and wallet service Coinbase. The service allows you to accept payments in Bitcoin, Bitcoin Cash, DAI, Ethereum, Dogecoin, USD Coin, Litecoin, Tether USD, ApeCoin, and Shiba Inu. When your customers make a payment, it is received directly into your merchant wallet.

Key Takeaways

  • Coinbase Commerce is an enterprise blockchain service that facilitates cryptocurrency transactions between customers and merchants, including Bitcoin, Bitcoin Cash, DAI, Dogecoin, Ethereum, Litecoin, USD Coin, Tether USD, ApeCoin, and Shiba Inu.
  • Coinbase Commerce accounts comprise on-chain payments, which removes the possibility of any fraudulent transactions.
  • Using Coinbase Commerce reduces extra fees like foreign exchange fees, fees to payment processors, and other third-party transaction fees.

How Coinbase Commerce Works

Coinbase Commerce is operated by one of the top cryptocurrency exchanges, Coinbase. The service enables merchants and businesses across the globe to accept payments from anywhere in the world using the supported cryptocurrency of their choice.

Coinbase Commerce integrates with your checkout workflow or can be added as a payment option on the shopping portal. Any cryptocurrency payment made by a customer gets credited to your Coinbase Commerce account, from where you can transfer it to your desired wallet.

No matter where you’re at, you can sign up for the Coinbase Commerce platform using a valid email address and a phone number. It uses a two-factor authentication mechanism based on the Google Authenticator app that introduces an additional layer of security.

Ensure you account for the cost of converting cryptocurrencies to fiat currency, and do the math on the fees for an estimated number of small transactions to get an idea of the extra costs.

You should be aware of the following factors before choosing Coinbase Commerce for your payment systems:

  • Transferring cryptocurrency from a customer’s wallet to a merchant Coinbase Commerce account incurs a network processing fee. This fee is paid to the cryptocurrency network’s validators (not Coinbase Commerce).
  • Coinbase Commerce charges a 1% transaction fee. The Bitcoin network’s fees vary depending on the size of the transaction and how many you process.
  • You can convert cryptocurrency payments to fiat currencies (like the U.S. dollar) using a cryptocurrency exchange, which might charge you additional fees.

Integrating Payments From Customers

Coinbase Commerce makes the most sense if you’re selling your services online. It is also affordable and works well for freelancers or small business owners whose products are cheap to produce with little overhead. Coinbase Commerce easily integrates with leading e-commerce platforms, such as Jumpseller, Primer, Shopify, and WooCommerce.

Coinbase Commerce for Customers

When you choose Coinbase Commerce, your customers can pay you using their preferred wallet. There are many different wallets, but each one does essentially the same thing: it shares a public key with you (the merchant who uses Coinbase Commerce), which you then use to access the customer’s funds on the blockchain.

Customers will find it easier to transfer funds to you if they have a Coinbase account and use the Coinbase wallet, but any wallet will work with Coinbase Commerce.

How Secure Is Coinbase Commerce?

Coinbase Commerce is as secure as all other e-commerce platforms. The exchange is a transaction facilitator, offering merchants a way to accept cryptocurrency from customers. It does not hold funds, goods, or services.

That said, you can choose to use a Coinbase wallet and let the exchange hold your keys for you. However, this transfers your private keys to the exchange storage service, essentially giving it control of your funds. You can choose not to let Coinbase store your private keys for you, but you’ll need to use secure storage methods for the cryptocurrency private keys you’ll accumulate from accepting payments.

Coinbase Commerce uses seed phrase recovery to secure transactions. Seed phrases are a list of words that store all the information you need to recover cryptocurrency funds on-chain.

They are a common feature in many crypto wallets, and you can even buy seed phrase keepers that etch your seed phrase into a physical metal wallet. All transfers, including refunds, will require inputting your seed phrase.

Make sure you don’t lose your seed phrase. Unfortunately, Coinbase does not store this phrase, so it cannot recover it for you. If you lose this phrase, you lose access to your wallet and funds.

Benefits of Coinbase Commerce

There are several benefits for both merchants and customers who use Coinbase Commerce services:

  • Merchants benefit by accessing a global customer base and a seamless, hassle-free mechanism to receive borderless digital currency payments.
  • You and your customers benefit from the low transactional costs of cryptocurrency payments compared to charges from credit card networks and payment processors.
  • Foreign exchange rates and foreign transaction fees that many credit cards charge are eliminated.
  • Coinbase Commerce account payments are on-chain payments, which means that all payment transactions get recorded in real time on the respective cryptocurrency blockchain.
  • Customer payments are fully integrated into Coinbase Commerce from a Coinbase wallet.

What Is a Coinbase Commerce Account?

A Coinbase Commerce account is a digital account that allows merchants to accept payment in one of seven cryptocurrencies.

Is Coinbase Commerce Free?

Coinbase charges a 1% transaction fee for its commerce accounts.

How Do I Add a Payment Method to Coinbase Commerce?

You need to open your wallet and click on “Settings” at the bottom. Next, select “Transfer Coins from Coinbase>Buy Crypto.” Then, select the coin you want, the amount, and tap “Add a Payment Method” to select a method. Follow the rest of the prompts, and you’re set.

The Bottom Line

Coinbase Commerce is a platform created to make it easier for merchants to accept cryptocurrency as payment. It integrates with many wallets and popular e-commerce platforms, reducing the costs businesses might incur when switching to a new payment method.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own cryptocurrency.



Source link