Four years after walking away from the space, international payments processing giant Stripe has returned to the crypto fold. An enthusiasm for Web3 is a part of the decision.
Along with on- and off-ramping fiat for cryptocurrency exchanges and scalable fiat APIs for crypto businesses, digital wallets and NFT marketplaces — still a process that can be difficult for companies to arrange — Stripe is offering know-your-customer (KYC) and identity verification services, as well as fraud prevention services “at every step of the payment flow.”
The news broke when Stripe CEO John Collison tweeted “Stripe now supports crypto businesses,” linking to a page offering “global payment solution for Web3.”
Stripe now supports crypto businesses: exchanges, on-ramps, wallets, and NFT marketplaces. Not just pay-ins but payouts, KYC and identity verification, fraud prevention, and lots more. https://t.co/3X173SkdPd
— John Collison (@collision) March 10, 2022
It’s the final step in a strategic turnabout announced in October, when Stripe head of engineering for crypto, Guillaume Poncin, tweeted that the company was starting a new crypto team and hiring engineers and designers to “lay the foundation to support and inform Stripe’s crypto strategy” and “build the future of Web3 payments.”
We’re starting a new crypto team at @Stripe. I’m hiring engineers and designers to build the future of Web3 payments: https://t.co/A40QPCw3XG. pic.twitter.com/ygYTrA125T
— Guillaume Poncin (@gponcin) October 12, 2021
Stripe supports on-ramping fiat currencies to crypto exchanges in 180 countries and off-ramping in more than 45 using Stripe Connect, its payment APIs and tools for digital marketplaces and platforms. Its Stripe Identity service can confirm the authenticity of documents from 33 countries.
Crypto Skepticism Fades
Poncin’s news came almost exactly two years after Collison said crypto was not a part of the firm’s business, adding “I’m very skeptical of anyone who’s adamant that crypto’s gonna work,” at the WIRED 25 conference.
Stripe had been an early supporter of bitcoin payments, beginning support in 2014. But it ended that at the beginning of 2013, citing technical factors like the lengthening transaction confirmation times, a growing failure rate, transaction fees so high they commonly were as costly as bank wire transfers and the resulting decrease in demand from both Stripe clients and retail customers.
However, it added at the time, “we will continue to pay close attention to the ecosystem and to look for opportunities to help our customers by adding support for cryptocurrencies and new distributed protocols in the future.”
That message was updated on March 10, saying, “we’ve learned that our optimism for the future of crypto was not unfounded.”
Citing blockchain infrastructure advances and “widespread interest from major financial institutions,” Stripe said it believes “crypto is going mainstream.”
As a result, it is “working to give crypto businesses access to today’s global financial infrastructure.”
Another Web3 Believer
The frequent references to crypto’s future being linked to Web3 — also known as Web 3.0 — follows a pattern of companies who see a new and widespread future for crypto and especially decentralized finance (DeFi) in the blockchain-based, privacy-centric next generation version of the Internet, which has a growing number of true believers in the crypto community.
See also: Web3: Is There Any ‘There’ There? And if so, Where Is It?
Still more of a dream than a functioning environment, Web3 is supposed to let web surfers take back control of their identities and personal data from tech giants like Alphabet’s Google and Meta’s Facebook, making it a portable product that users can take with themselves across platforms.
It will also be completely decentralized, with everything from search to data storage using a blockchain backbone.
The problem is that it’s mostly vaporware at this point, and has more than a few skeptics — most notably Tesla CEO Elon Musk and Twitter founder and Block CEO Jack Dorsey, who recently held a Twitter conversation arguing that Web3 was mostly hype, with what there is of it already being co-opted by billions of dollars in venture capital funding of developers seeking to build the “decentralized” projects.
More here: Musk, Dorsey Hint VC Money Puts Web3 Vision at Risk
A Better Customer Experience
The launch came with news that it had signed up a number of high-profile crypto clients, including Bitcoin.com and Sam Bankman-Fried’s FTX and FTX.US exchanges, NFT marketplace Nifty Gateway and Just Mining, a provider of staking, masternode and cryptocurrency mining solutions.
“We want FTX to become a trusted mainstream experience,” said Tristan Yver, head of strategy at FTX, in a statement. “To accomplish that, we need to deliver checkout experiences that are as clean as the experiences consumers have come to expect from leading retailers.”
That could be “sub-optimal,” with customers required to takes selfies and upload photos of ID documents — the current experience at most exchanges, even the largest — with too-frequent process failure requiring manual review that could take a week or more.
Using Stripe’s ID verification services was a big success, FTX President Brett Harrison tweeted in November. “We’re seeing greatly increased speed of KYC processing, higher rates of automated approvals, and a smoother UX for our customers,” he said.
We’ve recently overhauled our user onboarding process, and we’ve partnered with @stripe to bring their automated ID verification system to FTX. We’re seeing greatly increased speed of KYC processing, higher rates of automated approvals, and a smoother UX for our customers. :-)
— Brett Harrison (@Brett_FTXUS) November 17, 2021
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