Internet payment processor Stripe recently introduced a fiat to crypto onramp to tackle the “cold start problem” Web3 companies face when customers do not have access to the Internet. According to a May 4 statement, Stripe’s onramp will enable US-based customers to purchase crypto “at the precise moment they need it,” without needing to embed any code. Guillaume Poncin, Head of Engineering for Crypto at Stripe commented on the importance of the onramp, which Stripe will handle compliance-related tasks for. These include conversion and authorization optimization, identity verification and fraud prevention, to help customers get using Web3 services quickly and safely.
Integrated tools for fraud detection, identity verification and compliance monitoring were implemented to help companies meet their Know Your Customer (KYC) requirements. Web3 companies are often faced with challenges by customers who do not have crypto wallets in order to provide crypto and blockchain services. The statement noted: “Companies interested in offering cryptocurrency and blockchain-enabled experiences often face a cold start problem: Their customers don’t have the crypto in their wallets to carry out transactions”.
Stripe’s hosted-onramp has been implemented by several Web3 companies including Brave, a privacy-focused browser, and decentralized finance protocol (DeFi) Lens Protocol. James Mudgett, Vice President of Web3 Products at Brave, stated that the platform will be able to use the service to “reach new Web3 users”. Sergei Kunz, a cofounder of 1inch, has highlighted the importance in building a strong community and “bridges between Web2 and Web3”.
Speaking to Cointelegraph, Ohm Shah, co-founder of Wallet Guard, stated that Stripe’s new offering could “allow for many people to easily enter into Web3”. However, Shah noted the importance of conducting due diligence prior to purchasing digital assets, even if customers are aware of the company offering the fiat-to-crypto onramp. He noted: “While on-ramping with Stripe to purchase your very first NFT can be exciting, it’s important to consider how easy it is to lose your assets as all it takes is one malicious signature.”
Other companies have also announced their own fiat-to-crypto on-ramps. After mobile payment service Venmo announced its own fiat to crypto payment service April 28, PayPal Executive Jose Fernandez told Consensus that beginning in May the company will be “enabling on-chain transfers from Venmo wallets.” Robinhood also announced its own fiat-to-crypto on-ramp – Robinhood Connect – at Consensus 2023, with the ability to buy and sell cryptocurrency directly with a credit card or debit card to be available, either through a self-custody wallet, or natively within Microsoft Outlook. Decentralized Applications (DApps).
