Study Shows Why Fiat-Crypto Transaction Success Rate Depends On Location
As cryptocurrency continues to find its way into the mainstream financial sector, users are keen on exploring ways to use digital assets best in their daily transactions. However, a recent study shows that 50% of crypto-fiats transactions failed due to several factors.
50% Chance Of Failure
The gap between traditional and decentralized finance (DeFi) has gradually been reduced as crypto asset holders seek different ways to bring the two ecosystems together. As such, crypto on-ramp entities provide the easiest way for users of both assets to cross the bridge between the financial ecosystems.
A study with the digital asset financial service provider, Onramper revealed the success rate of crypto and fiat currency transactions. According to the report, 50% of fiat-crypto transactions are only sometimes successful despite the completion of know-your-customer (KYC) verification.
In addition, the difficulties in the processes’ failed transactions at the purchase flow stage can be as high as 90%. Meanwhile, the survey analyzed nine of the biggest crypto on-ramps involving some of the largest players like MoonPay, Wyre, and Coinify.
Data from the survey shows that the performance of the on-ramps differs widely from one another, which is widely influenced by user location. Of the highest success rate in crypto-fiat transactions, Europe takes the leading role, with Africa and North America having the lowest success rate.
Other factors affecting the success rate include payment method, the fiat currency used to convert into a crypto asset, and the available trading pairs for the currency. Compared to crypto transactions, bank transfers are believed to be superior due to their high success rates, with close to 100% in two instances during the survey.
Other Factors
The study shows that transaction value has more impact on the success rate of fiat-crypto transactions. Smaller tokens worth $1-$26 have a 66% success chance compared to transactions of up to $1,000, with an authorization rate of 19% during the study.
Based on the conclusion of the research, the potential solution to transaction authorization problems is for crypto service providers to offer as wide rates as possible for aggregated on-ramps transactions in a single platform. The authors suggest an alternative way of routing transactions is to provide users with the best options for payment issues.
In another development, Paolo Ardoino, the chief technology officer of the stablecoin issuer, Tether, revealed at the recent World Economic Forum (WEF) in Davos that his company offers on-ramp services for Bitcoin transactions.
Furthermore, the Hong Kong Monetary Authority recently revealed that it plans to integrate an on-ramp feature into its upcoming central bank digital currency (CBDC). With the rapid crypto adoption rate, it was not surprising that digital asset payment is gradually becoming the norm.
However, the recent regulatory scrutiny on the crypto industry from different jurisdictions calls for concern as experts believe this can hinder the growth acceleration of the crypto-fiat payment ecosystem.
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