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

Tanvir Zafar
Published: Dec 27, 2021, 15:29 UTC

Difference between Visa Credit Card and Bitcoin payment. How Bitcoin payments offer several important advantages over traditional Visa acquiring.

Visa and Crypto

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Have you ever wondered how electronic money transfers work? What is the difference between a contactless debit card payment compared to a cryptocurrency QR code transaction? Both do share something similar, however, and it’s that the end-user cares more about the successful payment completion than how it is done.

Still, as we understand how those systems work, it is clear that one is more robust and secure than the other.

How Does Visa Work?

As of Q4 2020, Visa had at least 3.6 billion cards in circulation, making it the world’s largest payment processor. Recently, however, Visa came into conflict with another financial giant — Amazon. The e-commerce behemoth faulted Visa for charging exorbitant credit card fees, going so far as to announce they will no longer accept Visa as payment in the United Kingdom.

In the payment processing game it’s all about speed and fees. Those players tapping into the bulk of the world’s money flow are tapping into the river made of gold, just as market makers provide stock exchanges with liquidity in return for micro-fees.

On a superficial level, both Visa and Bitcoin (BTC) run on vast computer networks to facilitate payments from one corner of the world to another. However, this is where most of the similarities end. Visa relies on connected banks via cards (debit or credit) to calculate how much money one is allowed to spend.

Then, Visa makes its money from micro-fees for running payments through all the steps of the process:

  • Authorization: Running the transaction from point-of-sale to card issuer, or the bank, for approval
  • Clearing: After the transaction is authorized, it is then settled between the card issuer and holder
  • Settlement: The exchange of funds executed between the aforementioned parties

Visa is not an independent money network. It is merely an electronic infrastructure that moves funds from one account to another, passing through multiple financial institutions. Although Visa’s transaction speed is great — at about no longer accept Visa — it is completely opposite to how Bitcoin’s network functions.

Visa vs. Bitcoin

Bitcoin also runs on a network of computers but these computers are not merely facilitators between various institutions. Each computer on Bitcoin’s network, called a node, not only facilitates transactions but also records every transaction ever made. “Moreover, Bitcoin’s blockchain network is independent of the banking sector because it generates its own money through the proof-of-work (PoW) consensus mechanism”- says Max Krupyshev, CEO of Coinspaid.

In other words, while a Visa card represents a gateway to the banks, a crypto wallet is like a gateway to the decentralized Bitcoin network. Banks have central points of failure, but Bitcoin can only go down if all entire global internet services goes down due to its international distribution of nodes, each holding the ledger of all transactions. Distributed ledger technology (DLT) is the backbone of decentralized finance, as all records are stored across various nodes to ensure security and data redundancy.

Another important distinction is that a crypto wallet does not hold Bitcoin similar to a normal bank account. Instead, it holds a private key to unlock Bitcoin’s ledger from anywhere in the world to access the Bitcoin. If the private key was lost, the wallet address itself could be recovered with a seed phrase, unlocking your access to the funds.

The implication of this is staggering because one could lose all the hardware with crypto applications and wallets on it, yet still be capable of unlocking the funds via the seed phrase. When you own Bitcoin, you carry an entire bank in your seed phrase. Word of caution though, if misplaced or forgotten, one could lose a fortune like with Stefan Thomas when he lost access to 7000 BTC, now worth around $395 million.

Visa pales in comparison as merely a crutch for the existing banking system. In contrast, Bitcoin is not only a banking system but its own payment processor system as well.

Is Bitcoin Superior to Visa as a Payment System?

Because Visa doesn’t have to rely on blockchain nodes to verify payments, but rather financial institutions, its transaction speed is impressive. However, Bitcoin has a trick up its sleeve to counter that called the Lightning Network.

In the case of the Lightning Network, its sole purpose is to offload transaction data from the blockchain’s mainnet, or layer one, onto itself as a layer two. In other words, the network consists of channels across which payments are made between two parties instead of the blockchain itself. This, ideally, circumvents Bitcoin’s slow throughput of only seven transactions per second (tps).

This kind of scalability solution consisting of over 31,000 nodes and 82,000 channels is not only lightning-fast but also cheap. While Visa’s average credit card processing fee is this:

1.29% + $0.05 to 2.54% + $0.10

Bitcoin’s Lightning Network median base fee is 1 Satoshi — the smallest denomination of BTC — or $0.000566531. Combined with speed, this makes Bitcoin the next-gen instant payment system. Furthermore, if for some reason banks go down, a decentralized blockchain network can only be shut down if the entire internet goes down as well.

In terms of merchant benefits, Bitcoin once again beats Visa payments. Chargebacks are a great case in point. Max Krupyshev, the CEO of CoinsPaid, explains: ‘Since transactions on a blockchain can only be initiated by a wallet owner, a chargeback – or friendly fraud – is simply impossible. This alone can save a merchant thousands of dollars each year’.

What is the Best Way to Onboard the Bitcoin Payment Train?

Whether you run a business or your own finances, it pays to have a trusted and properly audited crypto wallet such as CoinsPaid. As a seven-year veteran of the blockchain industry, It is tightly regulated by the Estonian Ministry of Finance, which follows the European Union’s strict regulatory framework.

Having already processed over 4 billion euro in 2021 alone, CoinsPaid is the beneficiary of the winner of Payment Provider of the Year by AIBC Summit 2020.

When you link your bank account with the exchange, you open the door to the entire world of crypto, not only Bitcoin but over 30 other cryptocurrencies and stablecoins, as well as over 20 fiat currencies.


Summarizing, we can say that Bitcoin payments offer several important advantages over traditional Visa acquiring. For merchants, accepting BTC means saving up to 80% on processing, avoiding chargebacks, and boosting their user base. For shoppers, paying with BTC is a way to make sure that the transaction goes through – regardless of where the user is located.

It’s understandable that many business owners are still cautious about crypto because of how it’s portrayed in the popular media. However, this is a case where it’s better to try something once rather than hear about it a hundred times – and those merchants who integrate Bitcoin payments generally view it as one of their best business decisions afterwards.

About the Author

Tanvir Zafarcontributor

Tanveer Zafar is a independent crypto journalist. He is passionate in covering topics about Blockchain, Cryptocurrency and Markets. He has five years of writing experience in these areas of interest. You can find his pieces featured on FXStreet, Benzinga, Investing and many more finance magazines. Tanveer has done his BS in Software Engineering at GC University. Previously, he has worked as a banker.

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