DEFINITION of Coinbase Commerce
Coinbase Commerce is the digital payment service that allows merchants to accept payments in a variety of digital currencies like Bitcoin, Bitcoin Cash, Ethereum and Litecoin. These payments are received directly into a merchant-controlled wallet.
BREAKING DOWN Coinbase Commerce
In an attempt to capitalize on the big potential available within the global cryptocurrency based payment systems and to serve merchants worldwide, Coinbase Commerce is operated by the leading cryptocurrency exchange Coinbase. It enables merchants and businesses across the globe to accept payments from anywhere in the world in the enabled cryptocurrency of their choice. (For more, see also Coinbase: What Is It and How Do You Use It?)
Coinbase Commerce offers a simple working mechanism. It integrates with a merchant’s checkout workflow or can be added as a payment option on the shopping portal. Any cryptocurrency payment made by a customer gets credited to the merchant’s Coinbase Commerce account from where it can be transferred to a desired wallet using a set procedure.
The merchants benefit by getting access to a global customer base and a seamless hassle-free mechanism to receive border-less digital currency payments. Both the customers and the merchants benefit from the low transactional cost of cryptocurrency payments, compared to the high transactional charges levied by a credit card. Using such virtual token payments also eliminates the dependency on foreign exchange rates, which may not be applied fairly by the credit/debit card operating banks. (For more, see What are the advantages of paying with Bitcoin?)
At the time of writing this article, the Coinbase Commerce platform supported payments in Bitcoin, Bitcoin Cash, Ethereum and Litecoin cryptocoins. It offers easy to use tools to the merchants in which they can easily set up the necessary account and start accepting the digital currency payments without getting into any technical complexities. It has integration with leading e-commerce platforms like Shopify, and new tools and features are expected to be added.
After the necessary setup, a merchant gets access to the Coinbase Commerce dashboard that allows him or her to view and operate on the different cryptocurrency balances, payments, checkouts and other necessary details.
All the customer payments made through the Coinbase Commerce accounts are on-chain payments, which means that all payment transactions get recorded in real-time on the respective cryptocurrency blockchain network and remain dependent on blockchain mechanisms for the necessary validation and authentication. It takes away the possibility of any fraudulent transactions being executed.
Any merchant across the globe can sign up for the Coinbase Commerce platform using a valid email address and a phone number. It uses a two-factor authenticator mechanism based on the Google Authenticator app that introduces an additional layer of security.
The Coinbase Commerce accounts are completely separate from the standard Coinbase trading accounts that are used for trading and investing in cryptocurrencies. It means that the holdings in the Coinbase account will not show up in the Coinbase Commerce account and vice versa, even if the account holder is the same. Coinbase Commerce simply acts as a mechanism for a user or merchant to receive the payments and does not have or maintain any information about a user’s cryptocurrency and/or his private keys. Similarly, Coinbase Commerce does not offer any option to the merchants to access the customer details.
At present, withdrawal from Coinbase Commerce accounts is not available and is expected to be enabled in the near future. In the meantime, one can use a third-party wallet, such as Jaxx, to move or transfer the necessary funds. The same process using a third-party wallet should be used to move the virtual currency tokens from the Coinbase Commerce account to any eligible Coinbase account. (For more, see also: Bitcoin's Most Profitable Use: the $600 Billion Overseas Remittance Business?)