Payment channels are off-chain mechanisms that allow multiple transactions between two parties without recording each one on the main blockchain. They reduce costs and increase speed by batching settlements. Lightning Network for Bitcoin is the most well-known example.
While Zateway currently uses direct on-chain settlement (for maximum transparency), payment channels represent the future of high-frequency micro-payments. As Layer 2 networks mature, Zateway plans to integrate channel-based settlement for sub-cent transaction costs.
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