Payments giant Stripe is set to offer a new product that makes it easier to hold cryptocurrencies without signing up with a cryptocurrency exchange. The company’s new fiat-to-crypto widget can be embedded into any crypto product, allowing users to enter their card details and obtain crypto that can be used in another web3 product.
There are a few use cases where widgets like this make sense. The most common are 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 with a centralized crypto exchange like Coinbase or Kraken. After verifying your identity, you can buy cryptocurrencies and then transfer those assets to your non-custodial wallet.
That’s not a seamless experience. That is why non-custodial wallet developers like Argent or ZenGo have used fiat-to-crypto widgets. Stripe isn’t the first company to come 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 over 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 is required.
That’s a much smoother experience because you don’t have to switch between multiple products. Of course, convenience doesn’t come cheap. MoonPay charges 4.5% on card payments, while Ramp charges 2.9%. They also both offer bank transfers at a lower cost.
Stripe’s fiat-to-crypto onramp would work more or less the same way. It is currently only available to US 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 a fee to that. You can then select the desired cryptocurrency and see how much you will receive once the transaction is confirmed.
In the sample screenshot from Stripe, the company charged $4.99 to buy $100 worth of USDC. But that fee may vary depending on the amount and payment method. Being a Stripe product, it should work with various payment methods from day one, such as card payments, bank transfers, Apple Pay, Google Pay, etc. Behind the scenes, Stripe has partnered with Zero Hash to acquire cryptocurrencies.
Stripe expects its widget to appeal to developers working on DEX, NFT platforms, wallets, and dApps. For example, the company says it has tested the product with Audius (a blockchain-based music streaming platform), Magic Eden (an NFT marketplace), and Argent (an Ethereum wallet I’ve already covered).
The payments company handles KYC, payments, fraud, and compliance so 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 example, it integrates with Link. If you’ve made a Stripe-powered purchase in the past and saved your payment information, Stripe can help you retrieve this information and pay faster.
After the FTX debacle, products like Ramp, MoonPay, and Stripe’s fiat-to-crypto widget will become essential. They can make it easier to avoid centralized exchanges. And it’s good to see that there are several companies working on that topic.