Even in the current crypto bear market, monthly fiat exchange volumes are still averaging approx $200bn. Fiat remains the main vehicle through which most people enter the crypto landscape.
There’s no denying that cryptocurrency will play a significant role in the global financial system, however, fiat currently has a prominent role and continued reliance on old fiat strategies could limit a crypto provider’s ability to scale, hindering the growth of crypto technology.
As more people embrace cryptocurrency, they deserve efficient and reliable access to crypto. The main problem is that banks and crypto don’t always speak the same language, which makes navigating the fiat-crypto flow processes long, complicated, and costly.
As a crypto provider, you want to offer your customers the best possible experience. That means finding a fiat partner who will help you facilitate fast, easy, and affordable deposits and withdrawals but, with so many options, how can you be sure you’re choosing the right one? Here are the key criteria to consider when selecting a fiat partner who makes your access to banking simple, reliable and efficient
Технология
You wouldn’t purchase a car without test driving it, so your fiat technology provider should be no different. The best partners will also provide APIs for your developers to plug into. These should be easy to understand and integrate.
The last thing you want is for your team to spend hours figuring out how to connect your systems. These APIs will have a sandbox environment for you to integrate with and test before you go live, and the sandbox environment will behave exactly as the production environment, except without any real money being moved. This will ensure that you can smoothly transition your integration from sandbox to production.
You’ll also want to ensure that your fiat partner has a secure system that has undergone penetration testing.
Still, on technology, you’ll want to consider the terms of the service level agreement (SLA). With an SLA in place, if there are any issues with the service, you’ll know exactly how they will be resolved. It is important to always consider how flexible the partner is with SLA’s; it’s all well and good that there are clearly defined SLAs, but if there are urgent issues / interruptions to your business, you want a partner where they have a culture of ‘getting things done’. If they can demonstrate this, you have reassurance that they are a partner and it’s not a transactional relationship.
Knowledge and Experience in Crypto and Financial Services
Your fiat partner should have specialised knowledge of крипто- and financial industries. For instance, they should understand how crypto platforms work and the specific compliance and regulatory challenges that crypto operators face.
Furthermore, they should have a good relationship with banks. This is essential because your fiat partner will be your conduit to the banks; you should explore the stability and reliability of these relationships. Have they been able to help other providers get uninterrupted banking services or at least significantly reduced payment delays?
Finally, do they have a good reputation in the industry? This will give you an idea of how reliable and trustworthy they are.
Leveraging Their Relationship
A reliable partner will have relationships with multiple crypto-friendly banks. Choosing a specialist Banking-as-a-Service (BaaS) provider, like Fiat Republic, will often unlock access to multiple banks which provides built-in redundancy for each jurisdiction and allows you to use local banks for each local market.It’s also worth asking about any potential shortcomings of your fiat partner. For instance, how many banks have they lost as clients? How many delayed payments have they been responsible for?
You should also find out if your fiat partner has a plan to unlock tier-1 banks. Tier 1 banks are the biggest and most prestigious banks in the world; while they can be more difficult and slower to partner with, due to more stringent due diligence and compliance checks, they do offer increased stability and access to better liquidity over tier 2-3 banks.
The Onboarding Process
Choose a partner with a seamless onboarding process specifically tailored for crypto providers. This will make it much easier for you to start and save time and effort. Also, although it requires more time upfront, ask about the compliance part of the onboarding process. A robust and thorough process that delves into specific detail regarding KYC, AML and transaction monitoring will ensure your compliance operations are sound. This will ensure minimal interruptions from banks and also will give you more flexibility and control, where you can adopt a risk-based approach to each consumer, reducing the need to constantly perform enhanced due diligence on arbitrary transaction limits or introducing transaction tiers based on KYC.
Be sure to check how long the onboarding process will take and when you’ll have access to live accounts. Sometimes, it can take weeks or even months to get approved. If you’re in a hurry, this could be a major problem. It’s also worth considering which jurisdictions your fiat partner operates in. If you want to expand into new territory, make sure they’ll be able to support you.
Регулирование и соответствие
Before you say yes to working with a fiat partner, you should dig deep into their regulatory coverage and roadmap. Find out where they are regulated and ensure this fits with your own roadmap. The last thing you want is to plan expansion into new territories, only to find that your fiat partner can’t support this growth..
It’s also important to see how transparent a fiat partner is in communicating their commitment to regulatory requirements. You should also check how they can support you to manage compliance issues. For example do they act as your first-line of defence when you receive RFI requests from banks? Do they give you visibility of transactions in compliance review, so you can proactively inform your customers? This can make a big difference to customers, who would otherwise be frustrated and lose trust in you, as they don’t understand why their payment hasn’t been processed.
Access to Fiat Currencies
You should consider the number of currencies your fiat partner provides access to. Make sure they have the fiat currencies you need for your own international expansion plans, на их дорожной карте.
You should also consider when the partner will be able to deliver these fiat currencies. In some cases, it can take months or even years to get access to certain fiat currencies. Sometimes, the delivery will depend on the bank your partner works with.
Payment schemes also matter, so you should determine whether the partner has global or local payment schemes. They should be able to provide you with a list of options, such as SEPA Instant, FPS, or ACH instant, and help you choose the best one for your needs.
Выводы
Choosing the right fiat partner can be tough, but it’s important to do your due diligence. Consider your customer’s experience and ensure they can access reliable banking and payment rails. It’s unlikely that fiat will stop being the main access point for crypto anytime soon, so getting this strategy right is crucial.
Source: https://en.cryptonomist.ch/2022/11/19/crypto-guide-choosing-right-fiat-partner/