What are merchant services?
Plural form of this phrase suggests that there is a set of various services, actions that provide a financial (payment to be more precise) services to the merchant. Merchant services are situated between the merchant and the costumer during the commercial transaction, because the money should move through the merchant services provider’s system. Merchant services are provided via credit cards, debit cards, electronic payments methods. Typically the banks, credit card companies or other businesses are providers of such services.
In the cryptocurrency sector merchant services encompass cryptocurrency payment services.
How merchant services work?
Merchant services receives cryptocurrency payment from a customer on behalf of the merchant. A merchant will receive funds via immediate settlement to their bank account, or may choose to settle in cryptocurrency.
Cryptocurrency can now be accepted online and in person, for online transactions you will require a payment gateway which will accept cryptocurrency. The most common way is through bitcoin online payments; however, solutions are available for most mainstream providers.
What is a merchant services provider?
A merchant service provider, or MSP, is any company that enables merchants to accept credit/debit card payments as well as alternative payment methods. MSPs usually offer a larger suite of services to accompany their payment processing, including business data, POS software, and payment gateways.
For example: Worldpay, Flexa, Coinpayments, WebMoney, Coinify etc.
What are the possible exploits?
Malicious websites can be registered to accept cryptocurrency payments that are processed by merchant services. The vulnerability of such platforms can be a blockchain- based system. This vulnerability was abused by hackers who in august 2021 made the biggest bitcoin theft in the cryptocurrency market history. They stole over $600 millions of dollars.
To read bout this: https://www.forbes.com/sites/jonathanponciano/2021/08/10/more-than-600-million-stolen-in-ethereum-and-other-cryptocurrencies-marking-one-of-cryptos-biggest-hacks-ever/?sh=5c62c8bf7f62
Why would consumer or business want to use cryptocurrency?
Is there a remittance’s fee for the merchant services provider?
Cryptocurrency payments are more direct transactions, which means they can be processed more cheaply than credit card payments. The same goes for cross-border payments and remittances. Thus there is a fee for merchant services provider but it is much lower than in a traditional (more indirect) transaction (for instance cash transaction).
How big is the potential risk for criminality?
Low. The merchant services category is generally a low-risk category. Users are typically traditional businesses and their customers. However, it’s worth noting that scammers sometimes integrate merchant services with malicious websites to accept cryptocurrency payments from their victims.