What are Crypto On-Ramps and Off-Ramps?
How do on-and-off ramps work? Learn how to choose the right fiat to crypto on-ramp options.
How do on-and-off ramps work? Learn how to choose the right fiat to crypto on-ramp options.
If you’ve ever bought crypto with fiat money, you’d have used a crypto on-ramp (also known as a crypto gateway). Crypto on-ramps connect the fiat and crypto worlds, offering a way to encourage accessibility and reduce the barrier of entry for investment into the crypto space.
Where on-ramps are a way to enable users to exchange their fiat money for cryptocurrencies, off-ramps are the opposite. Off-ramps let users cash out their earnings from crypto by enabling them to sell their digital assets for fiat money.
On the centralised finance (CeFi) side, there are three types of fiat-to-crypto gateways, each with their own pros and cons.
Exchanges with native on-ramps offer users a one-stop-shop, where they can purchase cryptocurrency with fiat money and start investing in the exchange’s offerings immediately. These often offer a smooth product experience for the user, as it’s built into the user journey.
The price on these exchanges may be higher, as it’s determined by the buyers and sellers on the exchange. However, because Cabital is integrated with multiple crypto exchanges, you’ll be able to purchase crypto on Cabital at leading rates.
Some crypto platforms offer different payment options when it comes to buying cryptocurrencies. In these cases, instead of having only one default payment channel, you have a list to choose from. These may offer different payment methods based on your location, ranging from bank transfer to credit cards.
The problem is, with so many to choose from, what do you look for besides the cost? After all, as we’ll cover in more detail below, the prices advertised may not be the final price you’re paying, as there are transaction fees, platform fees, and conversion spreads to consider.
There are also crypto platforms and apps that are not compliant and have to piece together multiple third-party vendors to enable users to top up fiat money for crypto purchases. This involves stitching together different on-ramps and payment methods or even sending users to another exchange, in order to purchase crypto with fiat money.
With so many providers involved, the user experience and the fees vary, resulting in a misalignment with the rest of the CeFi product experience.
Finding a compliant solution that is available in your region can provide users with a smoother and cheaper crypto purchase experience. Cabital is registered in Lithuania and is subject to EU regulations, while maintaining internal policies and standards on KYC and CDD that are modelled on leading financial institutions such as global banks.
As a user, by ensuring the platform you’re looking to invest in has an integrated fiat-to-crypto on-and-off ramp, you’ll be able to minimise additional fees. There may be a small fee charged for cross-platform transfers, but it will be significantly lower when compared to the transaction and withdrawal fees charged by exchanges.
Without a crypto on-and-off ramp integrated into the platform you’re looking to invest in, you’ll likely need to use multiple products in order to buy and invest crypto, incurring bank fees, withdrawal fees, and transaction fees along the way. These can leave you in the red even before you start earning with your cryptocurrencies, leaving you with smaller returns on your investment.
As an application developer, without a fiat-to-crypto gateway, interested users would have to leave your platform to search for a fiat-to-crypto gateway to buy cryptocurrency, while you hope that they’ll return to complete their purchase on your app. With crypto on-ramps, you’ll be able to integrate the purchase of crypto with fiat money into your platform, improving the conversion rate and reducing the risk of interested users leaving before they’ve completed their purchase because they’ve navigated away from your site.
When you’re looking for the best way to convert fiat to crypto, it’s intuitive for users to consider looking beyond the big exchanges. After all, big exchanges seem like a reliable and affordable choice.
However, that’s not always the case. Using a large exchange usually leaves you subject to prices that are determined by the buyers and sellers on the exchange, which may be higher or lower than the prices on other exchanges.
Hence, when you’re choosing a fiat-to-crypto solution, look for brands that are integrated with multiple leading cryptocurrency exchanges that can provide you with the most affordable prices and user experiences in the industry. At Cabital, our exchange rate is up to 6% more competitive than other exchanges that accept euros, which means you’ll get more crypto for the same price.
If the crypto platform you’re looking to invest in is already integrated with a fiat-to-crypto on-ramp, you’ll be able to buy and sell digital assets without having to navigate away from the platform. You’ll also be able to minimise gas fees as well. Now, transactions on the ERC-20 chain could cost you up to 40 USD per transaction, but Cabital offers an off-chain settlement solution, where crypto is transferred to the user’s wallet from Cabital’s platform, instead of taking place over the blockchain.
While there may be a small fee charged for cross-platform transfers, it will likely be significantly lower when compared to the gas, transaction and withdrawal fees charged by exchanges.
Besides the exchange rate, a great user experience and accessibility also helps when you’re trying to decide on the best way to convert fiat money to crypto. For example, while your original objective might be to buy crypto for investment purposes, you’d also want to ensure that you can easily turn your crypto holdings back into fiat money when you’re ready to cash out.
For users, finding an option that is competitive on price while offering a great user experience focused on speed and convenience is key. Meanwhile, an additional consideration for businesses looking to integrate payment infrastructure solutions is a seamless experience for their users, with minimal hassle and redirects to other websites.
To give you an idea of some key considerations when choosing the best crypto on-and-off ramps, we’ve put together a comparison table that outlines the different options available and how their offerings compare against Cabital’s.
When you’re buying crypto, it’s important to look beyond the listed exchange rates and check for hidden fees to ensure you’re getting the best bang for your buck. We’ve put together a list of considerations when you’re choosing the cheapest fiat gateway:
The listed price and exchange rate could be different at the start and end of your purchase. You’ll think you are purchasing crypto at a certain price, only to find out that the exchange rate at the end has increased, leaving you with less crypto than you expected. The increase in price could be due to platform or network fees.
As seen in the image above, your first impression is that you’ll be purchasing ETH at a rate of 1 ETH ≈ 2,175.18 EUR. Upon clicking in, it looks like you’re purchasing ETH at a rate of 1 ETH ≈ 2,364.06 EUR when you see the exchange rate on the platform from the service provider, and you expect to receive 0.0423 ETH.
However, when you reach the confirmation screen, the amount of ETH has changed. Now, instead of receiving 0.0423 ETH as promised, you only receive 0.0418 ETH, which makes up only 90.94 EUR of your 100 EUR budget, with the rest deducted as transaction fees.
At Cabital, we ensure that the price you see is the price you pay, with zero platform fees.
Unexpected transaction fees are a common occurrence on many leading platforms. These can be a flat fee, or a certain percentage of your total purchase value, and it’s usually revealed right at the end before payment. This will be deducted from your total planned purchase amount, so be sure to check whether you’ll be charged fees before you confirm the transaction!
As seen below, the transaction fees are around 10% of your total planned purchase value, leaving you with less ETH than promised earlier in the purchase process.
It’s exasperating to spend time filling out and verifying your identity, only to find out you’re about to be charged fees. Choose a platform with no transaction fees to avoid this!
Right now, as part of our launch promotions, there are no fees when buying cryptocurrencies on Cabital’s partner platform, Bybit.
The conversion spread can also impact the cost of your cryptocurrency. The spread is the difference between what the crypto costs for the exchange, and how much you pay to buy it (or receive from a sale) from them. By including a spread in the price, the exchange locks in a price for executing the trade or purchase while you review the transaction details before completing your transaction.
If you use Cabital to buy and sell cryptocurrency, this is as low as 0.02%, but it can go as high as 8% when you purchase with a credit card.
Beyond the price, other common considerations for a crypto investor who’s looking for the easiest crypto on-ramp solution are speed, user experience, and convenience.
Before your order is processed, you’ll have to pass the KYC processes from the on-ramp provider. As mentioned above, these processes are implemented to protect your personal information and funds, while ensuring compliance with global financial regulations.
For crypto traders, it’s important to find the solution with the shortest processing time from order execution to settlement. Due to the volatility of the crypto market, the price of a digital asset fluctuates depending on trade volume and activity, so ensuring you can get your funds as quickly as possible is key to avoiding drastic price fluctuations.
For businesses looking to improve conversions, our payment infrastructure solution, Cabital Connect, lets your users buy and sell crypto within your platform, at competitive prices. As a fully integrated fiat gateway solution, users will enjoy a seamless experience from depositing and purchasing crypto with fiat money, to withdrawing their digital assets in the fiat currency of their choice.
For users of our partner platform (Bybit) who choose to buy crypto through Cabital’s fiat on-ramp gateway, they won’t have to pay hefty gas fees because Cabital transfers the crypto from its platform to their Bybit wallets through an off-chain settlement solution, which saves Bybit users money on every transaction.
On top of the earlier mentioned advantages like zero platform fees and low conversion spread, to speedy KYC processes and processing time, Cabital Connect also provides users with an outlet to earn interest on their holdings while waiting for the next trading opportunity.
To find out more about Cabital Connect, check out this video featuring our CEO, Raymond Hsu.
You can also reach out to us at https://www.cabital.com/products/cabital-connect#wf-form-Cabital-Connect-Email-Form
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