December 14, 2022
Purchasing crypto with fiat currency is how most mainstream users and gamers initially get onboarded to the web3 space. But around 70% of the fiat-to-crypto onramps fail in major web3 markets - especially in India, Latin America, or Southeast Asia. And this only represents payment transaction failure.
Onramping failure does not only frustrate users but also affects web3 games and wallets, as they are turning away a significant number of users in key markets. And without payment analytics, some of those companies don’t even realize how big the issue is!
In major web3 markets, many users find it hard to get their identity verified for transactions, let alone buying in-game tokens or NFTs. Such difficulty is also reported by many of our web3 partners. Although Vietnam, the Philippines, India, Brazil, and Thailand are among the top 10 countries in the world for crypto adoption in The 2022 Global Crypto Adoption Index by Chainalysis, global onramps fared poorly.
The data presented in our chart captures transaction success rates at the point of the transaction using credit cards. On top of payment transaction failure, other factors that lead to even more users turning away from dApps or web3 games are KYC failures, confusing UX and high transaction fees, and the lack of local payment methods in regions with low credit card penetration rates.
Users’ photographic IDs or proof of address are used to fulfill Know Your Customer (KYC) requirements. In developing countries, users who fail to pass KYC processes are choosing to abandon their cart before payment completion. This is because such processes assume similarities across countries, and, thus, are not taking into account users’ access to varied KYC documents in different markets. For example, most onramp providers only accept passports for their KYC requirements. But providing such documents is not easy for users who barely travel.
Proof of address is also quite tricky for people in developing markets to provide, since these users don’t have access to a phone statement. Poor camera quality is another contributor to why KYC fails, especially when using devices that have low camera quality.
From our findings, users in various markets are having poor experience with onramp providers. They find it confusing to tell apart which chain they’re on and sometimes fail to buy assets on certain chains. Differences in terms of minimum transaction fees also affect users’ experience, as the range can vary greatly from one onramp provider to another.
E-payment on mobile devices is a preferred payment method in developing markets. However, due to the variety of applications in each country, most onramps cannot cover every local payment method there is. For example, in Vietnam, XanPool’s users can only onramp via ViettelPay (a local fintech application). Such localization is not adequate to cover the Vietnam market, since millions of users are also using other popular e-payment providers, such as Momo, ZaloPay, or Airpay, etc.
Low credit card penetration rate is another barrier, as it remains below 10% in markets like Thailand, Indonesia, and Vietnam. As such, many users in these regions are still unwilling or unable to pay for the high fees associated with credit cards.
Onramps and offramps still play a vital role in onboarding new users to web3 wallets or games. Relying on one or two onramps can lead to frustrated new users in a regional or global rollout. Many dApps or games don’t have payment analytics and do not even know how many users or revenue they are losing from a poorly localized payment integration.
With an aim to localize payments and increase transaction success rates, Poko’s fiat-to-crypto payment solution can offer:
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