CoinGate Introduces Payments on Arbitrum
An attempt to combat high Ethereum gas fees has been rolled out by CoinGate.
Over the summer, the payment gateway service introduced payments on the Arbitrum network, describing the move as ‘a breath of fresh air’.
What is CoinGate?
Based in Lithuania, the fintech company offers crypto payment processing services to businesses. Established nine years ago, it has become a ‘go-to’ option for permission-based account management.
With a vision of being part of the movement toward mass adoption of cryptocurrency, CoinGate provides a range of methods to set up crypto payments for businesses, whether physical stores or online only.
It is widely used by leading e-commerce platforms, which deploy CoinGate’s payment buttons, web PoS application, API integration, and official plugins.
But CoinGate isn’t just for merchants. The company also has a platform where a range of cryptocurrencies can be bought and sold with a single payment, where users can pay with credit and debit cards, with SEPA bank transfers, and can sell their tokens for fiat.
CoinGate and Arbitrum
In June, CoinGate announced the introduction of payments on the Arbitrum network. It was aimed at users wanting to shop on CoinGate using ETH, but who found the transaction fees to be too high.
For some time, gas fees on Ethereum have been a problem for developers and users. Ethereum attempted to counter this with upgrades intended to speed up transactions and bring down fees.
However, the frustrations with Ethereum led to the proliferation of layer-2 solutions, each competing to offer faster, cheaper transactions than Ethereum.
Arbitrum has attracted attention for a novel approach to scalability on the Ethereum blockchain, using ‘optimistic rollups’.
In a website blog, the company said introducing payments on the Arbitrum network was a ‘breath of fresh air’.
Arbitrum was launched in the autumn of 2021 as a quicker, cheaper alternative to the Ethereum mainnet.
The layer-2 platform, developed by Offchain, claims to maintain the same level of security and decentralisation as Ethereum while executing transactions off-chain, to improve performance.
How the agreement works
CoinGate explained that users who want to spend USDT and ETH at merchant websites supported by the fintech firm's payment processing can now use the Arbitrum network. This, it said, would significantly speed up processing time and cut gas fees.
At the time of the announcement, the company said a transaction on Ethereum would cost between $0.75 and $1. Using Arbitrum to send ETH would cost around $0.05 per transaction, a substantial reduction.
To keep things simple, the company explained that users would just have to select the Arbitrum network before making a payment. The most complicated part, it said, was connecting your Ethereum wallet to Arbitrum.
You’ll need to connect a compatible wallet, like MetaMask, then use the Arbitrum bridge to deposit ETH or ERC-20 tokens like USDT onto the Arbitrum network from the Ethereum mainnet.
After that, CoinGate claimed, the remainder of the process is a ‘breeze’. The company expects Arbitrum to become a ‘popular payment rail’ by offering the benefits of the Ethereum mainnet without the high gas fees.
The payment processing company has also made public statements about complying with changing regulatory compliance.
It issued a statement in the wake of two key pieces of legislation impacting crypto payments: MiCA and TRF (Transfer of Funds Regulation). Due to come into force within the next year, both will apply across the European Union.
MiCA sets rules for participants in crypto-asset markets, aiming to enhance consumer protection and improve market confidence.
CoinGate confirmed it would comply with the new regulations, making ‘several adjustments’ to operations and development. It will also introduce new policies, including keeping electronic records of clients’ account statuses, and enhance security and resilience with changes to its ICT systems.
The company said the changes are ‘considerable’, but will bring benefits to CoinGate and its customers. These include being recognised as a financial institution, allowing more effective marketing and operating of services in the EU.
TRF is chiefly aimed at crypto-asset and payment service providers, with the intention of improving transparency and combatting crime. This will involve additional collection of detailed information about transactions and those involved.
CoinGate said the changes needed under the new rules would only apply to external cryptocurrency payments made from CoinGate to other crypto-asset service providers. This would include instances of refunds to cryptocurrency wallets.
In its statement, CoinGate said the shopper’s name, DLT (distributed ledger technology) address, country, ID document, address, and details allowing the beneficiary to be identified would be gathered for every relevant transaction.
Where transactions exceeding €1,000 involved self-hosted wallets, verification of wallet ownership will be required. If not provided, transfers may be rejected.
The crypto payment processing firm believes the new regulations will 'further strengthen' trust in CoinGate and create a better-regulated and more secure cryptocurrency market.
While adapting to the changes, the company said, the main focus would remain on providing customers with 'the best crypto-asset services while upholding the highest standards of safety and security'.
Author: Brendan Beeken
Moni Talks Founder and Chairman Brendan Beeken is an entrepreneur, commercial strategist, investor, and philanthropist. He writes on a wide range of subjects, including cryptocurrency, decentralised finance, blockchain, business advice, and professional wellbeing, for news and business websites, as well as Latest Moni and his personal site, brendanbeeken.com. Brendan draws from his own research and more than two decades of personal experience in business to offer a unique insight, perspective, and commentary on diverse subjects. He is passionate about making the cryptocurrency space more accessible and encouraging safer and more responsible trading and investing. Brendan's LinkTree is https://linktr.ee/brendanbeeken.