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Are Bitcoin Payment Services Similar to Credit Cards? What’s the Difference?

What is the difference between paying with a Visa credit card and paying with Bitcoin? When compared to regular Visa acquiring, Bitcoin payments offer several significant advantages.

Have you ever been curious about how electronic money transfers operate? What's the difference between paying with a contactless debit card and paying with a cryptocurrency QR code? Both, however, have one thing in common: the end-user is more concerned with the effective completion of the payment than with how it is done.

Even still, if we understand how they work, it's clear that one is more secure and reliable than the other.

How Does Visa Work?

Visa was the world's top payment processor in Q4 2020, with at least 3.6 billion cards in circulation. Visa, on the other hand, recently clashed with another financial behemoth: Amazon. The e-commerce titan chastised Visa for charging high credit card fees, even announcing that Visa will no longer be accepted as a form of payment in the United Kingdom.

It's all about speed and prices when it comes to payment processing. Those who tap into the majority of the world's money flow are tapping into a gold river, just as market makers supply liquidity to stock exchanges in exchange for micro-fees.

On the surface, Visa and Bitcoin (BTC) both rely on massive computer networks to transmit payments from one part of the world to another. However, here is where the most of the parallels end. Visa calculates how much money one is permitted to spend using associated banks and cards (debit or credit).

Then Visa makes money by charging micro-fees for processing payments at various stages of the process:

Authorization: Taking the transaction from the point of sale to the card issuer's or bank's approval

Clearing: Following authorization, the transaction is settled between the card issuer and the cardholder.

Settlement: The financial transaction between the aforementioned parties.

Visa is not a stand-alone payment system. It's simply an electronic infrastructure for transferring funds from one account to another while travelling through several financial institutions. Although Visa's transaction speed is excellent — many merchants no longer accept Visa — it operates in a fundamentally different way than Bitcoin's network.

Bitcoin vs. Visa:

Bitcoin is similarly powered by a network of computers, but these computers aren't only intermediaries between different institutions. Each computer on the Bitcoin network, known as a node, not only allows transactions but also keeps track of all previous ones. "Moreover, because it generates its own money through the proof-of-work (PoW) consensus process, Bitcoin's blockchain network is independent of the financial sector," adds Max Krupyshev, CEO of Coinspaid.

In other words, a crypto wallet is similar to a Visa card in that it acts as a gateway to the decentralised Bitcoin network. Because of its international spread of nodes, each of which holds the ledger of all transactions, Bitcoin can only go down if the entire global internet service goes down. The backbone of decentralised finance is distributed ledger technology (DLT), which stores all records across multiple nodes to provide security and data redundancy.

Another significant contrast is that a crypto wallet does not store Bitcoin in the same way that a traditional bank account does. Instead, it stores a private key that can be used to access Bitcoin's ledger from anywhere in the world. If the private key is lost, a seed phrase can be used to restore the wallet address, giving you access to the cash.

This has huge implications because it means that even if all of the hardware with crypto programmes and wallets on it is lost, the cash can still be unlocked using the seed phrase. You carry a full bank in your seed phrase when you own Bitcoin. However, if misplaced or forgotten, one could lose a lot, as Stefan Thomas did when he lost access to 7000 BTC, which is currently worth $395 million.

As a crutch for the existing financial system, Visa pales in comparison. Bitcoin, on the other hand, is not only a banking system but also a payment processor.

Is Bitcoin a Superior Payment System Than Visa?

Visa's transaction speed is impressive because it does not rely on blockchain nodes to validate payments, but rather on financial institutions. Bitcoin, on the other hand, has a trick under its sleeve in the form of the Lightning Network.

The Lightning Network's sole function, as a layer two, is to unload transaction data from the blockchain's mainnet, or layer one, onto itself. In other words, rather than the blockchain itself, the network comprises of routes via which payments are conducted between two parties. This, in theory, avoids Bitcoin's sluggish transaction rate of only seven per second (tps).

This type of scaling solution, with over 31,000 nodes and 82,000 channels, is not just quick but also inexpensive. While the average credit card processing fee charged by Visa is:

1.29% + $0.05 to 2.54% + $0.10

The Lightning Network's median base cost is 1 Satoshi, or $0.000566531, which is the smallest denomination of Bitcoin. When combined with speed, Bitcoin is the next-generation rapid payment mechanism. Furthermore, if banks fail for whatever reason, a decentralised blockchain network can only be shut down if the entire internet fails.

Bitcoin once again outperforms Visa payments in terms of merchant benefits. Chargebacks are a good example of this. 'Since transactions on a blockchain can only be started by a wallet owner, a chargeback – or friendly fraud – is simply impossible,' says Max Krupyshev, CEO of CoinsPaid. This can save a business thousands of dollars per year.'

What is the Most Effective Method of Getting on the Bitcoin Payment Train?

It pays to have a reputable and thoroughly audited crypto wallet, such as CoinsPaid, whether you operate a business or manage your own finances. It is closely regulated by the Estonian Ministry of Finance, which follows the European Union's tough regulatory framework as a seven-year veteran of the blockchain business.

CoinsPaid is the winner of AIBC Summit 2020's Payment Provider of the Year award, having processed over 4 billion euro in just 2021.

When you link your bank account to the exchange, you gain access to the entire crypto world, including not just Bitcoin but also over 30 additional cryptocurrencies and stablecoins, as well as more than 20 fiat currencies.


To summarise, Bitcoin payments have a number of significant advantages over standard Visa acquiring. Accepting BTC saves merchants up to 80% on processing costs, eliminates chargebacks, and expands their user base. Using Bitcoin to make a purchase ensures that the transaction is completed regardless of the user's location.

It’s understandable that many business owners are still cautious about crypto because of how it’s portrayed in the popular media. However, it's better to test something once than to hear about it a hundred times, and retailers who accept Bitcoin payments consider it to be one of their best business decisions in the long run.