To use web3 applications, users need an easy way to get money from their bank account or credit card into crypto. Many applications send users to exchanges like Coinbase to buy their first crypto, but moving back and forth between an app and an exchange is clunky and confusing for users. Only highly motivated users make it.

Crypto On-ramps

Credit card on-ramps like Moonpay, Transak, Ramp and Wyre solve onboarding for some users but have low approval rates. These can be very lucrative businesses, but many issuing banks will deny all card transactions to purchase crypto because of high historical fraud.

Local payment rails like ACH in the United States can help solve the low approval rates with card transactions. Local payment rails won't automatically deny crypto purchases, but each comes with its own nuances and development teams would need to individually integrate local fiat rails in every region they want to support. Sardine and Ratio, who have launched ACH on-ramps in the last year, can be great options to onboard users within the United States.  

On-ramps can also leverage decentralized exchanges and cross chain bridges to scale to more chains and more tokens. Currently, most on-ramps use companies like ZeroHash or Prime Trust under the hood for their exchange infrastructure and as their liquidity provider so on-ramps themselves are limited by the tokens and chains their underlying exchange supports. Using decentralized exchanges and cross chain bridges can allow on-ramps to scale to new tokens and new chains quicker, giving on-ramps that do so a competitive advantage.

NFT Checkout

High card decline rates for crypto on-ramps created an opportunity for NFT Checkout products, allowing people to purchase NFTs with a credit card. Card companies classify NFTs under a different merchant category code so when an issuing bank needs to approve the transaction, they see a digital good purchase, not a cryptocurrency purchase. NFT Checkout products have acceptable approval rates as a result, but they are limited to only NFTs. NFT Checkout products include Paper, Crossmint, Wert and Winter.

Fraud

Fraud is a major challenge for on-ramps and NFT checkout products. If a fraudster has someone's card information or banking details, the best opportunity for them is to cash out in an irreversible, highly liquid financial system. Due to consumer protections, the on-ramp or NFT checkout provider will be left holding the bag, making it a risky business.

Fraud is a cat-and-mouse game where fraudsters will find a new loophole and then on-ramps will need to find and patch it. It's a tough business but the companies that can successfully manage fraud will end up big winners. Helping other companies manage fraud is a great business in itself, and the best companies at managing fraud will be able to build great on-ramps.

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Allowing applications to easily onboard users from their credit card or bank account remains one of the toughest challenges for user experience in crypto. There isn’t a path anytime soon for a completely seamless experience going from fiat to crypto and vice versa, but the businesses that make this experience marginally better will continue to thrive.

Thank you to Jack Jia for his feedback on this post.