Token
Quick Answer
A token is a digital asset created on an existing blockchain via smart contract standards (ERC-20, BEP-20). Payment gateways convert any supported token to the merchant's settlement preference.
Full Definition
A token is a digital asset created on an existing blockchain using a smart contract standard (ERC-20, BEP-20, SPL). Unlike native coins (ETH, BTC, SOL) which are integral to the protocol, tokens are built on top of networks. Tokens can represent currencies (USDC), governance rights (UNI), utility access, or real-world assets. In payments, customers can pay with any supported token, and the gateway converts it to the merchant's settlement preference.
Related Terms
Testnet
A testnet is a separate blockchain using valueless tokens for development testing. Payment integrations should always be tested on testnets (Sepolia, Amoy) before mainnet deployment.
Tokenisation
Tokenisation represents real-world assets (property, equity, invoices) as digital tokens on blockchain, enabling global transfer, fractional ownership, and programmable payment models.
Transaction Fee
Transaction fees combine network fees (gas) and service fees. Crypto gateways typically charge 0.5-1.5% versus card payments' 1.5-3.5%, with even larger savings on cross-border transactions.
Transaction Hash (TxHash)
A transaction hash is a unique hexadecimal identifier for a blockchain transaction, used to track payment status on block explorers and provide irrefutable proof of payment.
Travel Rule
The Travel Rule requires VASPs to share sender/receiver identification for qualifying transactions, originating from FATF Recommendation 16 to prevent money laundering in cross-border crypto.
TVL (Total Value Locked)
TVL is the total crypto deposited in a DeFi protocol's smart contracts. Higher TVL in liquidity pools means deeper liquidity and better exchange rates for payment settlement.