What is ERC-20: the Ethereum token standard

ERC-20 is a specification that describes how a token contract on Ethereum must behave. It defines functions such as balanceOf, transfer, approve and transferFrom, the Transfer and Approval events, and optional fields such as name, symbol and decimals. Because every compliant token exposes the same interface, wallets, exchanges and payment systems can support thousands of tokens with one piece of code.

For payments, the essential parts are transfer and the Transfer event. When a customer pays in USDT or USDC on Ethereum, their wallet calls transfer on the token contract, and the contract emits a Transfer event with the sender, recipient and amount. A payment gateway watches these events for its addresses, rather than the plain ETH value of the transaction, which is zero for token transfers.

Every ERC-20 transfer is an Ethereum transaction, so it costs gas paid in ETH. A customer with USDT but no ETH cannot pay. Token transfers consume more gas than a simple ETH transfer, and fees rise when the network is busy, so Ethereum is often the most expensive network for small payments.

Typical mistakes for developers: forgetting decimals (raw amounts are integers, and USDT uses 6 decimals while many tokens use 18), trusting the token symbol instead of the contract address, and misunderstanding approve. Approve lets another address spend tokens on the owner’s behalf; malicious sites ask users for unlimited approvals and later drain wallets, so a payment flow should never need one.

Moonvex accepts ETH, USDT and USDC on Ethereum. Each payment gets its own address or a permanent deposit address, and the service tops up gas itself when sweeping tokens.

When accepting ERC-20 tokens

• match the token by contract address, not by name or symbol
• convert raw amounts using the contract’s decimals
• read Transfer events, not the transaction’s ETH value
• remember that sending tokens out requires ETH for gas