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Internet payment processor Stripe has introduced a fiat-to-cryptocurrency exchange ramp for Web3 companies to solve the “cold start problem” of customers who do not have “cryptocurrency in their wallets to complete transactions.”
According to a May 4 announcement, Stripe’s recently launched fiat-to-crypto exchange service will enable Web3 companies to enable their U.S. customers to buy crypto “at the very moment they need it.”
It was noted that the feature was implemented with the goal of optimizing “conversion and authorization rates to increase the likelihood of making legitimate purchases.”
It has implemented built-in tools including fraud detection and identity verification to help companies meet Know Your Customer (KYC) and compliance requirements.
We’re introducing a Stripe-hosted fiat-to-cryptocurrency onramp (no code required) and unlocking the waitlist for the embeddable onramp. https://t.co/U9OW2cjFrZ pic.twitter.com/jjmkDUiOqc
— Stripe (@stripe) May 4, 2023
It was highlighted that Web3 companies often face the problem of their customers not having cryptocurrencies in their wallets when trying to offer cryptocurrencies and blockchain services. He noted:
“Companies interested in providing cryptocurrency and blockchain-enabled services often face a cold start problem: their customers do not have cryptocurrencies in their wallets to conduct transactions.”
Stripe hosting has been implemented by several Web3 companies, including the privacy-focused browser Brave, the 1inch decentralized finance (DeFi) protocol, and the Lens Protocol blockchain protocol.
James Mudgett, VP of Web3 Products at Brave, said the service will allow the platform to “reach new Web3 users.”
Meanwhile, Sergey Kunz, co-founder of 1 inch, stressed the importance of building “bridges between Web2 and Web3.”
Related: Crypto-friendly Stripe Weighs Public Offer: Report
Speaking to Cointelegraph, Om Shah, co-founder of Wallet Guard, stated that Stripe’s new offering could “allow a lot of people to easily log into Web3.”
However, Shah emphasized the importance of conducting due diligence before purchasing digital assets, even if a well-known brand provides an opportunity to buy cryptocurrency. He noted:
“While switching from Stripe to buying 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.”
This came after mobile payment service Venmo announced on April 28 that it was creating its own cryptocurrency payment service.
During an interview at the Consensus 2023 conference, PayPal CEO Jose Fernandez da Ponte said that starting in May, the company will “enable online transfers from Venmo wallets.”
Robinhood also announced its own fiat-to-cryptocurrency conversion platform – Robinhood Connect – at Consensus 2023, allowing users to directly buy and sell cryptocurrencies with a credit or debit card, either in their self-custody wallet or natively in DApps.