Custodial vs Non-Custodial Payment Gateways, what are they and what it means to merchants.

4 min readSep 9, 2022

If you’re a merchant who accepts or is looking to start accepting cryptocurrency payments, you may have come across the terms “custodial” and “non-custodial” when researching crypto payment gateways. What do those terms mean? And more importantly, which type of gateway is right for your business? Let’s break it down.

But before we get into it, for those who are comparing traditional (fiat) with crypto payment gateways, do note that all traditional payment gateways are custodial and carry similar advantages and disadvantages to a custodial crypto payment gateway.

Custodial Payment Gateways

A custodial payment gateway is a service that holds onto your cryptocurrency on your behalf. When a customer pays you in cryptocurrency, the custodial service will convert the cryptocurrency into the fiat currency of your choice and deposit the funds into your account. The benefit of using a custodial service is that you don’t have to worry about complicated setups, the service will take care of all of that for you.

However, the downside is that you are trusting a third party with your cryptocurrency, which comes with its own risks. By entrusting your cryptocurrency to a third party, you are giving up control of those funds. This means that if the company that operates the custodial payment gateway’s security is compromised, or becomes insolvent, there would be nothing stopping them from taking your cryptocurrency or disappearing entirely with your funds.

Another thing to keep in mind is that custodial payment gateways are centralised, which means that they’re subject to potential security compromises and outages as any other centralised service. If the processor goes down, your funds could be temporarily unavailable. Likewise, if the processor is compromised, your funds could potentially be stolen. Given the proliferation of security breaches in the crypto space, this is definitely something to keep in mind.

Non-Custodial Payment Gateways

A non-custodial payment gateway is a service that allows merchants to accept cryptocurrency payments without taking custody of the funds themselves. Instead, the cryptocurrency is sent directly to the merchant’s wallet. With a non-custodial gateway, all transactions are processed on the blockchain — meaning that the merchant never actually touches nor has control over the underlying cryptocurrency. In other words, a non-custodial payment gateway bypasses intermediaries such as exchanges and brokers and interacts directly with the blockchain.

The benefits of this are that you retain control of your cryptocurrencies at all times. Subsequently, non-custodial gateways are often considered to be more secure than their custodial counterparts since there is no central point of failure that hackers can target.

Another benefit of a non-custodial payment gateway is that service providers are not able to freeze your funds, which a custodial payment gateway is able to do. There have been numerous reports where merchant funds have been withheld for long periods of time even after the dispute or issue has been resolved.

So which type of payment gateway should you choose?

That depends on a few factors. If you’re comfortable with entrusting a third party to receive and collect funds on your behalf, a custodial payment gateway might be a good option for you. However, if you’re comfortable managing your own crypto, want to avoid paying high fees, and would like to have access to payments made to you in real time, a non-custodial payment gateway might be a better option.

Paywong is a non-custodial crypto payment gateway that provides merchant services for businesses that cater to all customers. Paywong is also useful for individuals who are working as freelancers and want to get paid for their services in crypto. With Paywong, anyone can accept crypto payments from anywhere in the world with low transaction fees and with or without a website. The startup is also working with a third-party off-ramp solution to allow its users to convert crypto to fiat in real-time.

Paywong is slated to launch later this year with features that include an intuitive dashboard to manage user funds, e-commerce integrations and also an invoicing system that generates a payment link for anyone to share. They are currently offering the first 5,000 signups with a lifetime offer of 0.5% transaction fee. Simply join the waitlist, and you’ll be on your way to accepting crypto as payment from your customers.

For additional information and updates, visit the official website along with the Twitter, Linkedin, and Telegram channels.

About The Company

Paywong is a product of Walawong Solutions Pte Ltd — a Web3 startup based in Singapore. We are on a mission to simplify crypto payments for businesses by leveraging the power of blockchain technology.


Moe Tengku

Sam Zulkifli




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