The idea behind cryptocurrency is to create a decentralised system by which transactions can be made safely and securely using blockchain technologies rather than the centralised system of traditional banking. However, there is no decentralised solution to convert between digital and FIAT currencies. with regard to merchant services this means all transactions that involve conversions between FIAT and digital currencies must be carried out by a traditonal, payment service provider.

What’s the Problem with Digital to FIAT Conversions?

Transactions in the world of digital or cryptocurrencies are fundamentally different to traditional banking transactions. The ethos of digital currency transactions is to provide greater transparency while offloading necessary security to wide community scrutiny over the blockchain. This is almost totally at-odds with identity based security used to process FIAT transactions such as card payments.

Without access to the usual security data for transactions, traditional payment service providers treat all digital to FIAT conversions as “high risk” transactions – applying higher fees and possibly delayed payments to merchants.

How do You Convert FIAT to Digital Currency?

Any conversions from FIAT to digital currency, for example buying some cryptocurrency via an exchange that allows direct purchase with FIAT, or over-the-counter or OTC exchanges where users trade with each other directly at agreed prices that may not match the exchange rate.

FIAT currencies must be processed by traditional methods (card payments for example) to start the journey to becoming digital assets. Assets can then be added to the blockchain via on-ramps. Money flows around as digital currency within its own realm, while FIAT currency flows around the traditional markets with the on and off-ramps acting as bridges between the two financial worlds.

There are many innovative developments in new ways to develop cryptocurrency ramps and much investment in developing a fully decentralised solution for FIAT to cryptocurrency conversions but for the time being we must rely on a traditional, centralised process each time money moves between the two financial worlds.

Merchant Services for Cryptocurrency and Digital Assets

The ability to buy digital assets with a debit or credit card makes cryptocurrency accessible to anyone who already uses online payments or making online purchases. As many exchanges offering on-ramps for cryptocurrency also offer off-ramp serviecs the ability to easily convert cryptocurrency back into FIAT currencies investment in cryptocurrencies more attractive. This flexibility makes digital assets appear to the public to be more like traditional commodities.

However, industry regulation of cryptocurrency ramps is a work in progress. Many providers have been implementing fairly comprehensive “Know Your Customer” and anti-Money laundering policies. These policies generally include access to some personal information along with documentation of identity; further aligning the process with the security methods of traditional payment processing. This can be seen as divergence from the purist philosophy of cryptocurrency with its ideals of anonymity but for the majority of public users the addition of traditional security can be reassuring.

Cryptocurrency Ramp Providers

Many of the big-name companies in cryptocurrency such as Coinbase and Binance all offer purchases of cryptocurrency with a debit card, as well as a variety of options for converting to FIAT for a commission paid when the client eventually does want to withdraw their assets. Additionally, there are many exchanges that offer OTC (over-the-counter) cryptocurrency trading. B2C2 and Genesis offer a strictly OTC process.

Access to available services is important is arguably the key to bringing wider adoption into the cryptocurrency realm, and with a combination of existing and developing means.