How Crypto Payment Gateways Work

On 6 December 2017 Valve stopped accepting bitcoin on Steam, and its announcement read like a fault report on the machinery behind crypto checkouts. A game's bitcoin price held only for a fixed window. If the payment did not land inside it, the amount owed could move, and bitcoin had recently lost as much as 25% of its value over a matter of days.

Fees made it worse. Valve said network fees charged to customers had peaked at close to $20 a transaction the week before, against roughly $0.20 when Steam first switched bitcoin on. A shopper who came up short had to be refunded or asked to send the balance. Either fix meant paying that fee again.

That sequence, a price set in one currency and paid in another against a clock, is the job a crypto payment gateway exists to manage. This guide is educational and is not financial advice.

It starts with an invoice

The shop's prices stay in its own currency. When a customer picks the crypto option, the checkout asks the gateway for an invoice in the merchant's own currency, say £60 for a pair of boots, and the gateway works out what that comes to in bitcoin, ether or USDC at its current rate.

That rate is then held for a short window, and the window is the whole trick. BitPay, founded in 2011, locks its quoted rate for 15 minutes. Inside that quarter of an hour the customer knows the exact amount to send, and a swing in the market does not change the deal.

Next comes somewhere to pay: an address or payment request tied to that one invoice, so an incoming transfer can be matched to one order. On the Lightning Network the invoice itself does the work. A BOLT 11 payment request names the payee and, for a shop, the amount, and unless it says otherwise it expires after 3,600 seconds, which is one hour.

None of this is new. From 11 December 2014 Microsoft let customers fund their Microsoft accounts with bitcoin through BitPay and spend the balance in the Windows and Xbox stores.

Deciding when a payment counts

A transaction appearing on the network and a transaction being written into a block are two different moments. That gap is the risk. Between the two, an unconfirmed payment can, in principle, be replaced by a conflicting one that sends the same coins somewhere else.

Gateways let the merchant choose where to draw the line, and BitPay offers three settings.

• High speed marks the invoice confirmed as soon as the full payment is seen, before any block has included it.

• Medium, for bitcoin, waits for one confirmation, about 10 minutes on average.

• The low setting holds out for further confirmations and only treats the invoice as confirmed once the funds are credited to the merchant's account.

On a £4 coffee, the worst case under the first option is losing £4. On a £1,500 laptop the same risk costs far more, which is why the slower settings exist. Speed against the chance of a reversed payment is the merchant's call.

Underpaid, overpaid, late or lost

Customers get the amount wrong, and BitPay's help pages list the usual causes: typing in the price in dollars or euros instead of the crypto amount due, paying from an exchange that batches withdrawals so the rate moves before the coins leave, or leaving out the miner fee. A gateway needs a rule for each kind of mistake, and BitPay publishes its own.

An underpaid invoice is not treated as paid, and whatever did arrive is refunded. An overpaid one counts as paid in full and the excess goes back to the customer. A payment that lands after the 15-minute window has closed is declined, and an email goes out telling the customer how to claim a refund. Valve said that in 2017 it had seen an "increasing number of customers" end up needing a refund or a top-up.

The wrong network is messier, and there is no tidy rule for it. USDC exists on many blockchains, and an invoice asking for USDC on one of them is watching one token on one chain. The same dollars sent over a different network may never register against the invoice at all. Recovery, where it is possible, is a manual job.

How the merchant gets paid

Once an invoice counts as paid, the gateway owes the merchant money, and a shop whose rent is due in pounds usually wants pounds. The gateway converts the crypto and settles to the merchant's bank account, or pays out in crypto to a wallet the merchant controls. BitPay's developer documentation describes its settlements as transfers to merchants' bank accounts and cryptocurrency wallets, with a report behind each one.

Stablecoins are blurring that step, and on 12 June 2025 Shopify announced USDC payments built with Coinbase and Stripe, running on Base, the network Coinbase built. Merchants receive their local currency by default or can choose to take the USDC into their own wallet.

On 28 July 2025 PayPal announced Pay with Crypto for merchants in the United States. It covered more than 100 cryptocurrencies, converted each payment into a stablecoin or dollars on arrival, and carried a 0.99% transaction rate until 31 July 2026. PayPal's US fee table, updated on 1 October 2026, lists 1.5% from 1 August, so any fee figure is only as good as its date.

Refunds run in reverse

A card refund travels back down the same rails on its own. A crypto refund cannot just return to the sending address, because that address may belong to an exchange's pooled wallet rather than to the customer. So the gateway asks the customer where the money should go, and BitPay's refund records carry a field for exactly that address.

Then there is the rate. Refund a £60 order at today's price and the customer receives £60 worth of coins, which may be more or fewer coins than they originally sent. BitPay's full refunds now work at the current rate, and its option to refund at the original fixed rate survives only in a deprecated version of its refund system. Every refund also costs a fresh network fee, the same cost that helped push Steam out in 2017.

One more difference from cards: no card issuer can pull a payment back off a blockchain, so unless the service in the middle runs its own dispute process, a customer's route to getting money back runs through the merchant.