Payment giant Stripe is going to offer a new product that makes it easier to hold cryptocurrencies without signing up to a cryptocurrency exchange. The company’s new fiat-to-crypto widget can be embedded in any crypto product so that users can enter their card information and acquire crypto that can be used in another web3 product.
There are a few use cases where widgets like this one make sense. The most common one is probably non-custodial wallets. Once you have crypto assets in your wallet, you can interact with various web3 products using WalletConnect. You can buy NFTs, use DeFi products, etc.
But how do you upload crypto assets to these software wallets? The most logical use case is that you first sign up to a centralized crypto exchange like Coinbase or Kraken. Once you have verified your identity, you can buy cryptocurrencies and then transfer those assets to your non-custodial wallet.
That’s not a seamless experience. That’s why non-custodial wallet developers like Argent or ZenGo have been using fiat-to-crypto widgets. Stripe isn’t the first company coming up with this product. Crypto companies like MoonPay and Ramp are already available in many crypto wallets.
In that case, MoonPay and Ramp take care of KYC requirements, fraud and compliance. They support dozens of fiat currencies and customers from more than 150 countries. Essentially, you create an account with MoonPay or Ramp when you want to buy crypto assets and top up your wallet — no exchange-to-wallet transfer required.
That’s a much smoother experience as you don’t have to jump between multiple products. Of course, convenience isn’t cheap. MoonPay charges 4.5% on card payments while Ramp charges 2.9%. They also both offer bank transfers for lower fees.
Stripe’s fiat-to-crypto onramp would work more or less similarly. It is currently only available to U.S. customers who are invited to test the product.
When a user wants to buy crypto, Stripe’s widget asks you how much you want to spend in your fiat currency — the company adds fees on top of that. You can then select the cryptocurrency you want and see how much you will receive once the trade is confirmed.
In Stripe’s example screenshot, the company charged $4.99 to buy $100 worth of USDC. But that fee may vary depending on the amount and payment method. As it is a Stripe product, it should work with different payment methods from day one, such as card payments, bank transfers, Apple Pay, Google Pay, etc. Behind the scenes, Stripe partners with Zero Hash to obtain cryptocurrencies.
Stripe expects that its widget will appeal to developers working on DEX, NFT platforms, wallets and dApps. For instance, the company says it has been testing the product with Audius (a blockchain-based music streaming platform), Magic Eden (an NFT marketplace) and Argent (an Ethereum wallet that I’ve already covered).
The payment company handles KYC, payments, fraud and compliance so that crypto companies can focus on crypto instead of competing with Stripe. There are also some side benefits with Stripe’s fiat-to-crypto onramp product.
For instance, it integrates with Link. If you have made a Stripe-powered purchase in the past and saved your payment information, Stripe can help you retrieve this information and pay more quickly.
After the FTX debacle, products like Ramp, MoonPay and Stripe’s fiat-to-crypto widget are going to be essential. They can make it easier to avoid centralized exchanges. And it’s good to see that there are multiple companies working on that issue.