Non-Custodial Explained

DirectCryptoPay is a non-custodial payment gateway. This is a fundamental design principle that affects how payments flow, who controls funds, and what risks exist.

What Does Non-Custodial Mean?

In a non-custodial model, the payment gateway never holds, controls, or has access to merchant funds. When a customer makes a payment, the cryptocurrency moves directly from the customer's wallet to the merchant's wallet in a single on-chain transaction.

  Traditional (Custodial)              DirectCryptoPay (Non-Custodial)
  -----------------------              -------------------------------

  Customer                             Customer
      |                                    |
      v                                    |
  [Payment Processor]                      |  Direct on-chain transfer
  [  Holds Funds    ]                      |
  [  Takes a Cut    ]                      |
      |                                    |
      v                                    v
  Merchant                             Merchant
  (receives payout later)              (receives funds immediately)

How It Works Technically

1. Customer initiates payment -- The widget or payment link creates a Payment Intent
2. Transaction constructed -- The widget builds a transaction that sends tokens directly to your wallet address
3. Customer signs -- The customer approves the transaction in their wallet
4. On-chain transfer -- Funds move from the customer's wallet to yours in a single blockchain transaction
5. DCP verifies -- The DCP backend monitors the blockchain and confirms the transaction independently
6. Webhook sent -- You receive a notification that the payment is confirmed

At no point does DCP have custody of or access to the funds. The transaction is a direct peer-to-peer transfer on the blockchain.

Why Non-Custodial Matters

For Merchants

• Instant settlement -- Funds are in your wallet as soon as the transaction confirms (no waiting for payouts)
• No counterparty risk -- DCP cannot freeze, withhold, or lose your funds
• No chargebacks -- Blockchain transactions are final and irreversible
• Full control -- You hold the private keys to your wallet at all times

For Customers

• Transparency -- The customer can verify exactly where funds are going before signing
• Privacy -- No need to create an account with DCP or share personal information
• Direct transfer -- Funds go to the merchant, not to an intermediary

For Regulatory Compliance

• No money transmission -- DCP does not transmit money, reducing regulatory complexity
• Simpler accounting -- Payments are on-chain transactions between two wallets
• Audit trail -- Every payment is a public blockchain transaction that can be independently verified

Comparison with Custodial Gateways

Feature	Custodial (e.g., Stripe, PayPal)	Non-Custodial (DCP)
Fund Custody	Gateway holds funds	Merchant holds funds
Settlement Time	Days to weeks	Immediate (block confirmation)
Chargebacks	Possible	Not possible
Counterparty Risk	Gateway could freeze funds	No risk -- funds are in your wallet
KYC Required	Usually	Not for accepting payments
Per-Transaction Fees	2-3% typical	None from DCP (only blockchain gas)

What DCP Does (and Does Not Do)

DCP Does:

• Create and manage Payment Intents
• Provide the payment widget UI
• Monitor the blockchain for transaction confirmation
• Send webhook notifications to your server
• Convert USD prices to token amounts using real-time price feeds

DCP Does Not:

• Hold, custody, or control your funds
• Have access to your wallet private keys
• Take a percentage of each transaction
• Process refunds (you handle this directly wallet-to-wallet if needed)
• Have the ability to reverse or modify blockchain transactions

## Security Model

DCP's zero-trust verification model means:

1. The frontend cannot lie -- The widget submits a transaction, but only the DCP backend (reading the blockchain directly) can confirm it
2. The backend verifies independently -- DCP's blockchain monitoring does not trust the frontend or widget at all
3. Webhooks are signed -- Every webhook is HMAC-signed so your server can verify it came from DCP

This design ensures that even if someone tampers with the frontend code, they cannot fake a successful payment.