On May 4, Stripe, an online payment processor, announced the launch of a new fiat-to-crypto on-ramp to help Web3 companies address the cold start problem. The issue arises when customers do not have cryptocurrency in their wallets to perform transactions, which can hamper the growth of Web3 companies. The new on-ramp service will allow Web3 companies to offer US-based customers the facility to buy crypto without embedding any code into their website or app. Instead, customers will be directed to a link to convert their fiat into crypto.
Stripe will host the on-ramp and handle several compliance-related tasks such as identity verification and fraud prevention to help customers start using Web3 services quickly and safely. Built-in fraud detection and identity verification tools will support companies in meeting Know Your Customer and compliance requirements.
Stripe’s new on-ramp aims to support Web3 companies by providing a user-friendly way for customers to top up their crypto wallets. It addresses the problem Web3 companies face when their customers don’t have the crypto in their wallets to carry out transactions. Privacy-focused browser Brave, blockchain protocol Lens Protocol, and decentralized finance protocol 1inch are among the companies that have already implemented Stripe’s fiat-to-crypto on-ramp, according to the statement.
James Mudgett, the vice president of Web3 products at Brave, stated that the service would allow the platform to reach new Web3 users. Meanwhile, Sergei Kunz, 1inch co-founder, highlighted the importance of building bridges between Web2 and Web3. He added that Stripe’s experience with Web3 companies puts it in a good position to help.
Ohm Shah, co-founder of Wallet Guard, noted that Stripe’s new offering could “allow for many people to easily enter into Web3.” He emphasized the importance of conducting due diligence before purchasing digital assets, even if the customer is familiar with the company providing the fiat-to-crypto on-ramp.
Stripe’s new on-ramp service follows mobile payment service Venmo’s announcement of its own fiat-to-crypto payment service on April 28. During an interview at Consensus 2023, PayPal executive Jose Fernandez da Ponte said that the new feature would provide a use case for digital assets because crypto will be used for fast and free near-instant transfers between Venmo wallets and PayPal wallets. Robinhood also announced its own fiat-to-crypto on-ramp at Consensus on April 27. Robinhood Connect allows users to purchase and sell crypto using a credit or debit card in their self-custody wallet or natively in decentralized applications.
In conclusion, Stripe’s new fiat-to-crypto on-ramp is a step toward building bridges between Web2 and Web3. It will provide a user-friendly way for customers to top up their crypto wallets, helping Web3 companies address the cold start problem. Stripe’s new offering is expected to allow many people to easily enter into Web3. However, customers should perform due diligence before purchasing digital assets, even if the company providing the fiat-to-crypto on-ramp is familiar.
