December 28, 2022
There are today several fiat-to-crypto onramp providers on offer in the market. Unfortunately, for crypto wallets and web3 game studios looking for an easy way to onboard web2 and web3 users globally using fiat, choosing the right onramp provider(s) is far from straightforward. All onramp providers fail to provide a truly global solution due to their over-reliance on cards as payment methods and neglect of local payment methods, which excludes a vast majority of users in Latin America (‘LATAM’) and Southeast Asia (‘SEA’).
An ‘onramp’ is a payment gateway that allows users to spend in the fiat currency of their choosing and receive crypto in return. Onramps constitute crucial infrastructure in the web3 ecosystem as they serve as the bridge between the traditional and crypto worlds – without which users are unable to move their funds into and use web3 apps (‘dApps’).
‘Onramp providers’ refer to entities that manage the payment gateways and perform functions such as sourcing liquidity, partnering with banks, local payment processors, etc. Examples of the more established onramp providers that advertise global coverage are Transak; Wyre; MoonPay; Mercyuryo and Ramp Network. In contrast, examples of onramp providers with a more regional approach, offering local payment methods / Alternative Payment Methods (‘APMs’) are Latamex (Brazil & Argentina); Inswitch (LATAM); Xanpool (SEA); Onmeta (India); StraitsX (Indonesia).
Traditionally, users wishing to onramp into dApps need to go through a tiresome process of purchasing crypto with fiat on a centralized exchange and then transferring this to their non-custodial wallet. This involves several steps – disincentivizing web2 users from moving their funds to non-custodial wallets while frustrating web3 users who, while familiar with the process, need to spend much time and effort.
This problem is, in theory, solved by onramp providers that allow users to pay in fiat and receive crypto in their wallets in a few clicks without leaving their dApp or game. In practice, however, it is yet to be effectively solved.
Individual onramp providers are severely restricted in terms of their ability to serve markets globally – despite many claiming to be able to serve 100+ countries. This is because these providers usually only offer credit/debit cards as payment methods – which do not work well in LATAM and Asia due to both high card transaction failure rates and lower card penetration. Card issuers/payment processors in these countries often reject crypto transactions due to unclear and evolving crypto regulations and risk aversion to dealing with crypto. These ‘global’ onramp providers, with their significant reliance on cards as payment methods, are thus really only able to serve markets with high credit or debit card penetration (e.g. US or Europe) effectively.
DApps and web3 game studios, in contrast, usually have a global focus and need to onboard users from underserved countries like the Philippines, Vietnam, India, and Brazil – regions with high DeFi and web3 gaming adoption. This means that dApps and web3 game studios need to choose between integrating individually with several onramp providers (a resource-heavy approach) or focusing more on onboarding users from well-served markets. In our experience, the latter seems to be the more common approach, with dApps and web3 game studios deprioritizing onboarding web2 users from markets such as LATAM, SEA, and India.
Make your dApps and games accessible to users across the globe through Poko’s payment aggregator solution. Through a single integration, our SDK enables you to offer your users the most popular local payment methods in 100+ countries. Users are routed to the optimal onramp provider and local payment method, balancing considerations of success rate, speed, cost, etc. Some examples of criteria we use to route users to the best payment rail:
Do your onramp provider(s) serve your target markets? More importantly, do they offer the popular local payment methods in these markets?
Have you tested your onramp providers for how often transactions fail? We’ve found that most providers have abysmal success rates for underserved markets, such as those in LATAM, SEA, and India. A combination of unclear and changing regulations and varied payment processor and merchant bank policies results in poor performance.
Does the speed at which crypto is disbursed after paying fiat line up with the expectations of your users – such as, for instance, gamers who are just looking to play a game quickly?
Which onramp providers offer, on the whole, the most cost-effective way to convert fiat to crypto? From a business’ perspective, what are the integration costs, monthly fees, and minimum volume commitments?
Does your onramp provider offer customer support for the inevitable cases of transactions failing?
Do users need to be KYC-ed before conducting transactions and how onerous is the process? Does your provider accept the commonly used identification proofs in local markets?
Does your onramp provider give you access to crucial data about your users’ payment behavior – such as, at which stage users give up or abandon the transaction?
Onramp providers provide limited geographic coverage as they fail to offer the popular local payment methods used in local markets, such as in LATAM, SEA, and India. This leads to web3 games and dApps often choosing to prioritize Western markets for monetization, while neglecting markets in LATAM and Asia that are characterized by high web3 gaming and DeFi populations.
For web3 games and dApps looking for an easy way to onboard 2B+ users in LATAM and Asia from fiat to crypto, Poko has a solution. Reach out so we can support you in building better localized payment experiences for your users.