Internet payments processor Stripe has launched a fiat-to-crypto onramp to address the "cold start problem" Web3 companies face when customers don't have "cryptocurrency in their wallets to transact."
Stripe's new fiat-to-crypto onramp will allow the Web3 company to offer US customers the ability to buy cryptocurrency “at the exact moment they want,” without embedding any code into websites or apps, according to a May 4 statement.
Instead, customers will be directed to a link to convert their fiat currency to cryptocurrency. Stripe will handle several compliance-related tasks for Web3 companies using on-ramps, including conversion and authorization optimization, authentication, and fraud prevention, to help" customers get started quickly and securely with Web3 services," said Guillaume Poncin, Stripe's director of encryption engineering."
Notably, built-in fraud detection and identity verification tools were implemented to support companies in meeting know-your-customer and compliance requirements. The implementation of the new on-ramp service aims to support Web3 companies by providing customers with a user-friendly way to top up their crypto wallets. it says: “Companies interested in offering cryptocurrencies and blockchain-enabled experiences often face a cold start problem: their customers don't have cryptocurrencies in their wallets to transact.”
According to the statement, several Web3 companies, including privacy-focused browser Brave, decentralized finance protocol 1inch, and blockchain protocol Lens Protocol, have already implemented Stripe's fiat-to-crypto onramp.
James Mudgett, Brave's vice president of Web3 products, said the service will allow the platform "to reach new Web3 users." Meanwhile, 1inch co-founder Sergei Kunz emphasized the importance of "building a bridge between Web2 and Web3," adding that Stripe's experience with Web3 companies makes it "well positioned to help." Ohm Shah, co-founder of Wallet Guard, said that Stripe's new product can "easy access to Web3 for many people."
However, Shah emphasized the importance of conducting due diligence before purchasing digital assets, even if customers are familiar with companies that provide fiat-to-crypto onramps. He pointed out: “While buying your first NFT [nonfungible token] through Stripe can be exciting, it’s important to consider how easy it is to lose your assets as it only requires a malicious signature.”
This follows mobile payment service Venmo announcing its own fiat-to-crypto payment service on April 28.
In an interview at Consensus 2023, PayPal executive Jose Fernandez da Ponte said the new feature will provide a use case for digital assets, as cryptocurrencies will now be used for "fast and free near-instant transfers between Venmo wallets and PayPal wallets." Transfer money, which is basically connecting the two largest networks and wallets in the country." Meanwhile, Robinhood announced its fiat-to-crypto on-ramp at Consensus on April 27. Robinhood Connect allows users to buy and sell cryptocurrencies natively in their self-service wallets or in decentralized applications using credit or debit cards.
