October 22, 2021 |
James Messi
Relative to cryptocurrency, moving fiat currency through traditional financial systems is inefficient and expensive. Cryptocurrency payment services have been opening up to provide faster and cheaper fiat transfers. In this article, we cover the top ten digital asset payment providers and dissect how these services are leveraged to help FX brokers onboard clients with cryptocurrency.
Cryptocurrency is Lowering the Barrier to Entry for Forex Trading
The advent of cryptocurrency came in part as a result of how difficult and complicated it is to transfer fiat currencies both domestically and internationally. The problem stems from antiquated payment rails and the varying regulations that oversee currency transfers throughout the world. For FX brokers looking to onboard retail clients from different jurisdictions, these problems are exacerbated. Due to this, forex traders are left with suboptimal choices in how they will fund their trading account.
These typically include domestic or international wire transfers and payment by credit or debit card. Wire transfers can take up to 5 days to settle and often incur an expensive flat fee. On the other hand, funding a forex account with a credit card can get you trading in less than 24 hours but carries a high variable fee that will likely cost more than 10% of the total amount of the transaction. Traditional credit card payment providers tack on high fees for retail FX traders as the transactions are considered to carry more risk than the average transaction.
Enter digital assets such as Bitcoin. FX brokerages are discovering the true value of cryptocurrency as they continue to work with crypto payment providers to enable their clients to make deposits by purchasing Bitcoin.
In this case, the FX trader can avoid the delays and unreasonably high fees associated with wire transfers and standard credit card purchases, respectively. Now, when FX traders choose to fund their account with their credit or debit card, they can simply purchase an amount of Bitcoin with a substantially lower fee. The equivalent amount of fiat currency is then credited to the FX trader’s account, typically in less than one hour. By providing faster and cheaper methods to onboard FX traders, cryptocurrency is lowering the barrier to entry for the FX markets.
The Top 10 Cryptocurrency Payment Providers
As the need for better fiat on and off ramps grows, more companies that facilitate fiat to crypto purchases are springing up. These companies vary in their fees, ease-of-use, and payment methods offered. To determine which payment provider is right for you, select for companies based in or nearest to your locale for a higher acceptance rate. Then, look for payment providers that offer the lowest fees or the most convenient methods of transfer.
Ramp.Network
Headquarters: Poland
Currencies offered: Bitcoin, Ethereum, DAI, USDC, and more.
Payment methods: SEPA, wire transfer, credit or debit card.
Fees: 2.5%
Limits: 10K EUR
Verification: Government ID and selfie photo.
Simplex
Headquarters: Israel
Currencies offered: Bitcoin, Ethereum, USDT, and more.
Payment methods: credit and debit cards.
Fees: 5%
Limits: Up to $2,500 per day.
Verification: Government ID.
Paxos
Headquarters: United States
Currencies offered: PAX, PAXG, and BUSD.
Payment methods: Wire transfers.
Fees: $30
Limits: None
Verification: Government ID and selfie photo.
Coindirect
Headquarters: Isle of Man
Currencies offered: Bitcoin, Ethereum, USDC, and more.
Payment methods: Wire transfers, SEPA, PayPal, and more.
Fees: 2.99%
Limits: 500K EUR
Verification: c, and selfie photo.
PayTrie
Headquarters: Canada
Currencies offered: BUSD, USDC, DAI, and USDT.
Payment methods: Interac Request.
Fees: 1%
Limits: $2,000
Verification: Government ID and credit check.
Carbon
Headquarters: United Stated
Currencies offered: Bitcoin, Ethereum, USDC, and more.
Payment methods: SEPA, credit or debit card, PayPal, and more.
Fees: 3.4%
Limits: $2,500
Verification: Passport and selfie photo.
MoonPay
Headquarters: Malta
Currencies offered: Bitcoin, Ethereum, USDC, and more.
Payment methods: Credit and debit cards.
Fees: 4.5%
Limits: 20,000 EUR
Verification: Government ID and selfie photo.
Transak
Headquarters: United Kingdom
Currencies offered: Bitcoin, Ethereum, Ziliqa
Payment methods: SEPA, wire transfer, UPI India, and more.
Fees: 1.5%
Limits: None
Verification: Government ID and proof of address.
Wyre
Headquarters: United States
Currencies offered: Bitcoin, Ethereum, DAI, USDC.
Payment methods: ACH, credit card, wire transfer.
Fees: 20 – 75 basis points.
Limits: Up to 150K USD
Banxa
Headquarters: Australia
Currencies offered: Bitcoin, Ethereum.
Payment methods: Wire transfer, credit card.
Fees: 1-3%
Limits: Up to 500K AUD
Verification: Valid government ID and selfie image
Cryptocurrency to Fiat Bridge: How it Works
There are multiple different ways to utilize the cryptocurrency to fiat bridges mentioned above. In all cases, the client trader can more quickly and cost effectively fund their forex trading account by leveraging a crypto to fiat bridge.
To begin, the FX trader logs into their trading account and is presented with a few different options for funding the account. When a credit card is selected, instead of asking for a deposit amount, the trader is asked to enter the amount of Bitcoin they want to purchase.
Once the amount of Bitcoin is provided, the trader enters the details for their credit card and completes the transaction while saving up to 10% on fees. At this point, the Bitcoin purchased is effectively sold for fiat currency and that value is credited to the FX trader’s account. This process generally takes around 1 hour to complete. Compared to wire transfers and standard credit card payments which can take 1 to 5 days to settle, the FX trader no longer needs to worry about paying high transfer fees or missing trading opportunities that develop while funds are in transit.
