Innovation In Fiat On-Ramps Can Overcome Crypto's Expensive Card Fees!

• Paolo Ardoino
• 13 Jun, 2022

Decentralized technologies are vital in onboarding new investors to the crypto and Web3 ecosystem. Being in crypto is all about taking a philosophical view of money. We know that Bitcoin (BTC) is the future, both as a store of value and a means of payment, as layer two solutions such as the Lightning Network begin to flourish.

It is, therefore, vital that every cryptocurrency user makes sure that they always obtain the most competitive price for every service. While millions of crypto users convert fiat to crypto using a debit or credit card, this is by no means a low-cost choice.

Paying The Overhead: Converting Fiat To Crypto

According to The Motley Fool, people using credit cards to pay for crypto purchases may be subject to at least 7% extra fees. 

For example, if you were to purchase $1,000 in Bitcoin using a credit card, you could pay up to $70 in fees if your card issuer treated the transaction as a cash advance, on top of the standard processing fees.

While cryptocurrencies are globally accessible, one of the most significant barriers to mainstream adoption is not the acceptance of digital assets but rather bridging the gap between the crypto and fiat worlds.

The failure to do so has meant that most individuals have lacked the tools required to engage with digital currencies or have been met with exorbitant costs in interacting with the ecosystem.

An investor or user of cryptocurrency can execute various cryptocurrency transactions, each of which comes with its cost structure. 

The cost of any given crypto transaction can change regularly and on short notice, which means users must be diligent in checking those fees. This action is time-consuming and less than ideal when quickly moving in and out of positions.

We live in an age where so-called disruptive fintech services and applications, such as the digital banking services app Revolut, are creating a seamless banking experience. 

Still, when converting fiat to crypto, users are being stung by expensive, clunky solutions more akin to cashing in chips at a casino than purchasing the future form of money.

Exchanges Combatting On-Ramp Fees

Exchanges such as Bitfinex are integrating innovative solutions into their platforms to make converting fiat into crypto cheap and efficient.

In collaboration with OpenPayd, a digital banking and payment solutions provider, Bitfinex enables its users to transfer fiat currency from their bank account onto the Bitfinex platform at just 50 euro cents per transaction. 

The service is only available for euros, but the exchange plans to roll it out to other major cryptocurrencies.
 

Other exchanges are also trying to make purchasing crypto less costly by launching software development toolkits that will give self-custodial wallets such as MetaMask the ability to offer users a new way to purchase or transfer crypto to a wallet. 

This aims to streamline the onboarding experience into Web3 for users and reduce the fees that users incur when moving existing crypto balances from their accounts to a self-custody wallet/DApp using these new services.

Reducing Onboarding Costs By Replacing Antiquated Rails

With the advent of Web3 and cryptocurrencies, these innovations in payments may very well confirm the 2017 prediction that the age of credit cards may be coming to an end. 

Major payment solutions and service providers such as FIS and BCB Group are innovating new fiat-to-crypto solutions alongside younger startups like Fireblocks to introduce instant settlement networks between local currencies and stablecoins. 

These innovations will likely turn the antiquated payments infrastructure on its head as a new crop of solutions becomes available for all businesses that are set to touch cryptocurrencies in one way or another in the coming decades.

As retail and institutional money continues to pile into the cryptocurrency markets, almost every major company has its eyes set on streamlining the onboarding experience and making crypto payments more secure, accessible, and instantaneous. 

In doing so, these companies will reduce overheads for businesses that can then pass on savings to customers. Charging high fees to move fiat currency in and out of the crypto ecosystem is an unnecessary obstacle for investors. 

The fiat on-ramps and off-ramps that exchanges use to play a vital role in onboarding new investors to the crypto and Web3 ecosystem. (Cointelegraph)