How Crypto Payments Empower PSPs: Reducing Denials, Disputes, and Maximizing Efficiency

In a modern world, where time is one of the most limited resources, quick payments are essential for a well-functioning life and overall economy. Crypto payments have become a transformative force, offering distinct advantages including reduced transaction costs, denials, minimized disputes, and improved overall efficiency. But how exactly do crypto payments empower Payment Service Providers (PSPs), and why should businesses care? Let’s expand on this topic in more detail below.

The growing role of crypto and blockchain in payment processing

Blockchain is a new type of technology poised to revolutionize all fields of business, especially the financial side, including transaction processing, security, and trustless environments. Cryptocurrencies like Bitcoin, Ethereum, and stablecoins are changing how payment systems operate. These crypto assets bypass traditional banking systems and often offer faster and more cost-effective cross-border transactions. For Payment Service Providers (PSPs), this shift introduces a massive opportunity to address longstanding pain points like denial rates and operational inefficiencies. Many fintech PSPs solely operate as crypto payment providers. 

Top use cases of crypto payments in the PSP industry

Crypto payments have been popularized by many sectors, including gambling, e-commerce, entertainment, freelancing, cross-border transactions, recurring payments, and more. 

Gambling industry

PSPs that offer crypto payments are quite popular among casinos, including both online casinos and online crypto casinos, ensuring fast, anonymous, and secured transactions. Gambling was especially fast to adopt this new technology, as it allowed it to conduct fast payments without the need to abide by complex banking system rules and regulations. Well-developed countries like the UK are home to a growing number of online casinos that prefer crypto payments over traditional methods to ensure fast payments and eliminate transparency issues. Among these, the best online casino UK operators have embraced this trend, leveraging all the benefits of crypto payments to enhance the user experience. 

E-commerce

PSPs supporting crypto payments enable merchants to accept payments globally without currency conversion or chargebacks. While this sector is not as fast as gambling, e-commerce is still quickly adopting crypto payments as an effective cross-border payment solution for their multinational operations. Cryptos streamline e-commerce transactions, enabling faster, low-cost, and secure money transfers without intermediaries like banks. This reduces processing times and fees while simultaneously offering global accessibility. 

Freelancing and Gig economy

Freelancers and gig workers benefit from crypto payments, as these workers often work from home and are from different countries than the businesses hiring them. Crypto payments offer seamless, cheap, and fast transactions without delays and high transaction fees, unlike wire transfers. 

Cross-border transactions

Cross-border payments are one of the strongest sides of crypto payments. PSPs facilitating cross-border transactions find crypto invaluable for:

• Reducing delays

• Eliminating currency exchange complexities

Cryptos are much faster than banks, when it comes to international wire transfers, as they do not care about location as long as users have a wallet to send and receive their digital assets. 

Recurring payments

Stablecoins like USDT and USDC are ideal for subscription models where users have to pay subscriptions every month. They ensure price stability and fast settlement for recurring transactions. Stablecoins address the biggest weakness of cryptos: large price swings and unpredictable volatility, as they are pegged to traditional fiat currencies like the US dollar. 

How cryptos solve PSP challenges

Cryptos help PSPs to solve many issues, including reduction in transaction denials, minimizing disputes and chargebacks, and improving operational efficiency. 

Reducing transaction denials

Unlike traditional payments that depend on bank approvals, which are known for rejections for various reasons, crypto payments offer a flexible choice. Cryptos eliminate many of the traditional payment bottlenecks. Transactions occur on the blockchain, eliminating dependence on banks and other intermediaries. With cryptos, there are no insufficient fund issues as they require pre-funded wallets. Another powerful aspect of cryptos is their borderless nature, which allows for smoother and faster international transactions. 

Minimizing disputes and chargebacks

If there is one major headache for PSPs, it's disputes. With crypto payments, transactions are immutable and can not be reversed or changed in any way. Smart contracts also support automated compliance, which reduces the ground for disputes. Blockchain records are transparent and fully visible for all participants, which provides clear proof of transactions, making it almost dispute-proof. 

Enhancing settlement efficiency

cross-border transactions involve multiple intermediaries, which usually leads to delays and high fees with traditional methods such as wire transfers. Crypto streamlines this process with ease by:

• Instant settlements — Crypto payments settle in minutes no matter the geographical location of the sender and receiver of the transaction

• Cost savings — Bypassing intermediaries allows crypto payments to incur fewer fees, which is significant when compared to wire transfer costs

With blockchain technology, every transaction is approved by validators on the network and is immutable saved on the blockchain which is a public ledger in most cases, leading to unparalleled transparency and fast settlements. 

Improved operational efficiency

With cryptos, PSPs can automate many processes which are mostly manual with traditional payment solutions. Smart contracts automate compliance checks, payouts, and refunds, while blockchain analytics provides real-time insights and data into transaction history. This reduced need for manual reconciliations is a huge cost savings for PSPs, making it possible for them to operate with even a small team compared to commercial banks. 

Advantages of crypto payments for PSPs chart

Let’s briefly and clearly list all the advantages of supporting crypto payments for PSPs.

The future of crypto payments in the PSP industry

As blockchain evolves and the adoption rate increases, the potential for crypto payments is enormous for PSPs. Distinct trends in the sector include:

• Increased adoption of blockchain technology

• AI-powered blockchain analytics

• Integration with IoT payments

Central banks are pushing CBDCs (Central Bank Digital Currencies) which contributes to more development and refinement of blockchain technology contributing to crypto awareness worldwide. AI algorithms empower fraud detection and can optimize transactions. The future seems bright for cryptos and overall blockchain technology as it offers more transparent, cost-efficient, and faster transactions for international users. Crypto payments offer PSPs an effective solution to streamline their processes, reduce disputes, and denials, and maximize efficiency.