Blockchain Payment Infrastructure Technologies Driving Mainstream Web3 Adoption – Fiat Off-Ramps
As the shift towards Web3 projects continues to accelerate, it seems natural for businesses to offer their customers as many convenient payment options as possible, including buying cryptocurrency with the fiat currency of their choice. But that is not currently the case in decentralized finance (DeFi).
According to the latest Checkout.com survey, “40% of 18-35 year olds say they want to pay for goods and services with crypto during 2022. Some have already experimented with doing so. But more importantly, the vast majority of such experiments are not wallet-to-wallet transactions, but instead rely on payment processors and schemes whose products help bridge the gap between fiat and cryptocurrencies.” As crypto moves toward the mainstream, fiat on-ramps allow businesses to integrate crypto purchases with fiat money into their platforms, improving conversion rates and reducing the risk of users leaving before completing the purchase.
In connection with entering and operating in DeFi, it is convenient for consumers to purchase cryptocurrencies using their bank account or debit card. It is clear that fiat on and off ramp gateways are the future of growing DeFi from both a retail and institutional point of view.
So, what are fiat off-and-on ramps, and why are they critical to taking crypto mainstream? Why e-commerce companies, NFT platforms and cryptocurrency exchanges are increasingly looking at integration with a fiat on-ramp gateway?
Fiat “on-ramps” and “off-ramps” – what are they
An “on-ramp” is a gateway to exchange traditional fiat currencies, such as EUR, USD, GBP and others for cryptocurrencies, while a crypto “off-ramp” allows users to exchange crypto for fiat. As the digital economy diversifies, fiat ramps are essential for widespread adoption, providing security to users knowing they can exchange crypto for fiat whenever they want. Therefore, crypto on-ramp gateways are ideal because they combine both features. The on and off ramps can be integrated through the API or a widget method.
Recent use cases
As the global use of digital assets continues to grow, more businesses than ever are beginning to integrate cryptocurrencies into their payment platforms.
Recently, several players, such as crypto exchanges Bybit and Matrixport, Plaid and Bybit-backed GameFi Yeeha Games, announced integration with Capital Connect, a fiat on-and-off ramp platform. Payment platform startups, such as fiat-to-crypto payment gateway Onmeta, have recently announced funding. According to the company’s founder and CEO, Bharat T., “mainstream adoption of Web3 projects is only possible if Web2 UX can be brought to the Web3 ecosystem,” and this is where on- and off-ramp enterprise technologies come to the rescue. Users of the NFT marketplace iNFTSpace have also recently announced that they can now enjoy more direct purchases of digital artwork via Alchemy Pay’s fiat-to-crypto gateway plugin.
Hundreds of other projects around fiat-to-crypto payment infrastructure are underway. As the use of cryptocurrency continues to grow, ramp and ramp solutions become increasingly important. On-and-off ramp payment infrastructure connects businesses and consumers to the world of crypto and Web3, and their use will only grow in the future.
Challenges and key factors when choosing fiat-on-ramps
One of the biggest challenges for traditional businesses when choosing a fiat ramp remains how to comply with the law, as there are many nuances of compliance for crypto businesses in different jurisdictions. In order to prevent money laundering, terrorism sponsorship, drug and human trafficking, it is important to follow international and local regulations carefully.
Key factors to consider when choosing a fiat ramp include:
- Safety
- Strong KYC and AML processes
- Verification Procedures
- AML screening and monitoring
- Real-time global sanctions screening
- Know-your-transaction software
- User-friendly user interface
- Easy integration, requires minimal resources
- Integration cost
- Supported fiat currencies and cryptocurrencies
- Supported payment methods
- Fee structure
The truth and the matter is that still very few crypto companies are fully licensed. Many of them do not have proper AML and KYC to enable them to work with banks and e-money institutions (EMIs). To avoid worrying about KYC and AML requirements, NFTs, exchanges, e-commerce and other businesses interested in integrating fiat off-and-on ramps should first check if solution providers can handle international regulatory requirements and compliance.
If they do, your users won’t be required to go through verification twice when they buy cryptocurrencies with their fiat on your platform through their gateway. For businesses entering the Web3 and looking to increase conversions, integrating a comprehensive payment infrastructure seems to be the only way to maintain a competitive edge in the market.
