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, and Litecoin. When your customers make a payment, it is received directly into your merchant wallet.
- Coinbase Commerce is an enterprise blockchain service that facilitates cryptocurrency transactions between customers and merchants, including Bitcoin, Bitcoin Cash, DAI, Dogecoin, Ethereum, Litecoin, and USD Coin.
- 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. Coinbase Commerce enables merchants and businesses across the globe to accept payments from anywhere in the world in 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 miners in the cryptocurrency network (not Coinbase Commerce).
- Coinbase Commerce charges no transaction fees.. The Bitcoin network's fees vary depending on the size of the transaction and how many you process.
- You can convert your 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 also is affordable and works well for freelancers or small business owners whose product is cheap to produce with little overhead. Coinbase Commerce easily integrates with leading e-commerce platforms Shopify and Woo Commerce.
Coinbase Commerce for Customers
When you choose Coinbase Commerce, your customers can pay you using their hot wallets. 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?
One of the most often referred-to benefits of cryptocurrency is its security. However, it comes at a cost: If you lose your key, you can't reset your account. And if someone steals your key, they can empty your account quickly and anonymously.
Coinbase Commerce also relies on 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 Commerce does not have a way to generate new seed phrases.
Benefits of Coinbase Commerce
There are several benefits for both merchants and customers that use the Coinbase Commerce services.
- Merchants benefit by getting access to 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 no 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, how much you want, and tap "Add a Payment Method" to select a method. Follow the rest of the prompts, and you're set.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.