Przemek Kowalczyk on why crypto adoption stalls at the payment layer

0:00I'm Ashan Addison from the Crypto Coin Show and today on Blockchain Interviews we have Szymon Kawalczuk, co-founder and CEO of Ramp Network here to talk about crypto onboarding, multi-chain wallets, and what it what it takes for fiat connections to make it into the on-chain markets as everything is becoming tokenized and moving on chain. Szymon, welcome to the show and thanks for

0:22taking the time. Welcome. Great to be here. Yeah, excited to dive into this because the connectors from fiat to crypto, they're by no means perfect. They need to be that we really need to streamline that process to get more people involved in crypto and for the people that are in crypto to get them to pay their bills and whatever, you know, I they I'm sure

0:47it would be a dream for the crypto natives to be able to pay everything in crypto, but unfortunately, we're not at that point in the world yet and things like Ramp Network to ramp on and off are perfect solutions for that. excited to learn more about Maybe we can start with a high-level overview of what you and the team have built at Ramp Ramp Network and why it's important for

1:09the crypto industry. Mhm. Sure. So, one sentence, we put crypto in hands of every the users. So, we handle everything from the moment when the user wants to have crypto in their wallet to the moment when this crypto is delivered. And we call it in the our industry on-ramping. We work with wallets, exchanges, other partners that sit on this

1:37first step of complete newbies getting into the crypto ecosystem. On top of that, we also handle off-ramping. So, when you want to go out of the ecosystem, so for example, if you traded, made a lot of money, and then you wants to off-ramp from the from the from the ecosystem. And last year, we also introduced the swapping product where you can exchange

1:59one crypto for another. That's great and there's many different ways that people can get onboarded into crypto whether they're just signing up to an exchange or they meet somebody that gets them involved, but there's a lot of people that find it too technical or you know, they're just not interested for one reason or another. Where do you think most people drop off

2:22on the crypto onboarding and why more people haven't gotten involved yet? Sure. So, I think they're like there are two main points when the users are from [snorts] one reason or another are dropping off. So, one moment is payment. So, when you need to pay from for example, if you pay with a card that bank is not on the good on the good grounds with the crypto

2:50ecosystem, then your card payment can get rejected. Then you try another card and another card and it sometimes actually spiral into the situation where you just don't know how to get money into the ecosystem. But also, the other point is when you are making KYC. So, in the current ecosystem, basically everybody who uses crypto at some point needs to get KYC'd which means showing

3:15your ID, showing your passport, driving license, and explaining what you're doing and like who you who you are. And that's based on regulations all the governments in the world today they put on us this obligation to make the those those checks. And on both of those steps, you can do better or worse in terms of the provider

3:43as a as a on-ramp. And over the last 8 years, we tried very hard to optimize this flow to make sure that when you're making a payments, the cards is not rejected, that it's easy to make this payment, but also when you are identifying yourself that you can go through as little checks as possible and still be compliant. So, that is the flow is as easy as it can get

4:12so you don't have to fumble for your wallet and look for look for ID, you know, to get your transaction, but only once or even in some cases, it can be a simplified flow where you don't have to even go look for your passport. Mhm. Definitely, that's always a pain. On the payment side, I find that especially important. Can you clarify? Is it people that are trying to pay with their crypto

4:40or they're actually trying to buy crypto potentially with the card and what's the solution? Is it finding a better bank or does Ramp Network actually create their own card? Yeah. So, when you get into the crypto for the first time and you try to pay with your card for the crypto to receive crypto on the other end, from time to time, some banks

5:05are rejecting the transactions. Sometimes it's on the card network, sometimes it's on the banks and they're doing that is because they are afraid of fraud in the in the system or they just don't know what crypto is. There's also the case. And we are tackling this from two angles. So, the first one is that you need to work with card networks, you

5:29need to work with card acquirers, with payment processors and making sure that they understand what you're doing and we as a as a as a part as as a partner in this in this flow are we are trusted and we are verifying that the customers they know what they're doing, that this is what they want to do so buy crypto. And we need to like and we need to do

5:53that, we also have to fight fraud that happens. People are for example, stealing stealing card numbers and trying to steal out your money from the from from from your account. But also in other countries because we are global service, it's also about offering other alternative payment methods. So, in Europe, in UK, we have other other payment options like bank

6:22transfers, like more like for example, open banking that is also quite popular in Europe. So, those are the other ways to pay that are more modern than card networks and are just more adjusted to the crypto ecosystem. And there is less fraud in those in those in the in those infrastructure and the transfers are just

6:50better processed. Mhm. You mentioned 8 years in business. How have you seen the landscape shift over the years with regards to cards being flagged before for crypto and the likeness of banks warming up to it and also with the shift in the regulation being more pro-crypto in the US if that had an influence on it. Yeah. I mean like when we started, the

7:17crypto was just a wild west. People were making fortunes on like you know, like in one week just investing, speculating in the one one one token or the owner of this token doing the some some kind of scam and trying to some like there was the idea of rug pulls and other other hacks, but that was wild west. That was the wild west 10 years ago. Today is much more civilized.

7:45As I said, the card networks and banks are much work with crypto much better. They block much less transactions. It's much easier to get partners to work with you. When we started, we usually had a when we started a work cooperation with one vendor, we usually had to have two line up as a backups. So, just to have one vendor and then two in backups because

8:12you never know what's going to happen. Today it's it's better. Also, this is because of regulations. So, as you said, US in US we have different different political weather about around crypto. But also in EU EU is very regulated, but at the same time, those regulations give financial

8:39products and other businesses more assurance in terms of what they dealing with. So, because you have those regulation this trust from the government, then it is also try this trust can be used to negotiate with banks or other payment providers. Mhm. Mhm. And I read that you're working in was it 150 [clears throat]

9:05different countries? That's a lot to manage the regulatory side of it as well. Where are you guys focused on the high-growth areas? What does that look like globally right now? Yeah. So, around 60% of our flow and volume goes through US and Europe and UK. So, those are the three GOs that are the most important for us. 60 to the 70%. And

9:33those those use So, basically Europe and US. Those are the most developed Those are developed countries. Those are the countries that have the most mature financial ecosystem as well. And where those are the good markets for us in the where the very good markets in the last in the last years. What we are actually seeing in the in the past few

9:59quarters is significant improvements in LatAm, in Southern Southern Southern America. You have a lot of very quickly expanding economies there. People want to invest, people want to send money using crypto to for example US or the other way around. And

10:28just using crypto rails is more efficient because you are not hit by the typical limitations on the with the banking in the banking industry. Definitely. With the you mentioned KYC as the second onboarding part

[clears throat]

that can be an issue and having that streamlined and not having to do it every transaction or every platform. Although those procedures are in place,

10:54do you still see fraud vectors within within Ramp Network of on-ramps and off-ramps and if so, how do you deal with that? Of course, like the fraud is not is not never going to stop. As long as there are people who are transacting and sending money online then there's going to be thieves and criminals that trying to steal your money.

11:24And criminals often are very catched up with the where the tech is because they're also looking for the advantage. So you need to be faster and better to avoid scams, avoid frauds. That's this is something what we been working on for many years and it's this work is never going to never going to stop. You mentioned ID.

11:51So just you know like with the new development in the image generation, you can generate image of your ID image of an ID in just one prompt in one sentence is not nothing this is something that is so easy to in the in these days. And the usual old methods of verifying

12:18someone's IDs are no longer working. And that's why you need to be and that's why you need to be creative and you need to be always be on the leading edge there to protect protect our users and protect the wider ecosystem. Definitely. It's crazy. I can imagine. I don't know how well it would work but just you know prompting these IDs. I

12:46know there's liveliness markets and video but even that can be faked pretty easily now. I've seen people change persona and country and skin color in one click with full video. Yes. Yeah, exactly. You need to go you go need to be beyond liveliness check. So for example what in Europe is becoming more popular is to add a cryptographic keys to your IDs. So

13:14you basically there's you basically have a private key in your in your national ID. That's what I got for example in Poland. And using this cryptographic key, you can sign somehow almost like signing a transaction on blockchain. You can sign the your intent. You can sign who you are and like what you're doing. Yeah, that makes complete sense and that's like

13:41it's like a Bitcoin wallet, you know, it's there's only that one private key to be able to sign, you know. If you have Satoshi's wallet and that's why we understood from the beginning why blockchain is so valuable because it's you can't fake it like you can this old ID system where you just print out your picture on a card and show it. There's no faking private key

14:04encryption. Yes, it's the same tech. It's well tested, battle tested over the years and it's very nice to see the governments going the same direction. So they're basically adopting encryption and private keys same way as how we adopted it. Yeah, so if the ID has a private key, couldn't theoretically it just have a wallet that just holds the stablecoins or the crypto as well and

14:32then make payments? That's that's that's a good question. I know it like theoretically it's possible and I know some of the startups trying to experiment with that. It's not that easy thing because you cannot get access to the API. It's protected and you need to need to do it well. But I know that there are some experiments to do some crazy things around this.

14:58

[laughter]

Because governments like you cannot like imagine that European Union just lets you to yes, you can hold the Bitcoins on your ID. Yeah, it's a stretch. Yeah, in the future perhaps. It's a step let's start with the encryption of the ID itself and then we'll add in a crypto wallet when people are warmed up to that. So it the potential sounds very exciting to me

15:22at least. You know, you mentioned the US and EU UK being like over 60%. I'm sure there's many competitors as well. There's there's definitely different ways to on-ramp and off-ramp. How do you keep a competitive landscape with Ramp Network? Is it just comparing on fees or other value adds and get people to use Ramp Network instead of others? So usually how you competing those are

15:50like two key dimensions. So like first what is the conversion? So how well you are working? How many users that actually start the flow be able to finish it and this is about the points of the those points of drop off that we discussed at the beginning. And the second second dimension is in what countries you are available. So in are are you are you working well in

16:16Europe? Are you working well in US? But also are you working well in the South America? Do you have the payment methods that are adjusted to the local the local populations? Not everyone is using cards. Not everyone is using Visa Visa and Mastercard. You have UPI in India, you have Pix in Brazil. You need to adjust to the local expectations. Definitely. And you know, I would be

16:45ideal if we could just keep everything in crypto and pay and the service providers could pay their clients and everyone would accept crypto. We're not there yet. But I did just see a major announcement with Ramp Network that you've built a multi-chain wallet. How can you can you talk about that? Why it's needed and the importance of being able to access

17:12different digital assets instead of just moving to off-ramping every single time? Yeah. So what we've seen over the over the years is that the crypto was still being used as a just investment investment asset. And you could speculate, you could trade. But with growth of stablecoins, stablecoins are

17:39becoming a medium of exchange. Actual future that we always hoped for. So the crypto being used for transferring money. And that's our vision behind this product. So we want to put application in hands of our users that lets you to enter into stablecoin future and use those stablecoins to pay, to receive, to exchange money with your

18:09with your friends. Think of it about as like global Venmo. So you can so you can so you can send to anyone and receive money anywhere because we already have those connections. So we have those connections across the world. So you can easily top up and you can easily withdraw in any country. So if you want to send money for example from US to Brazil, it's very easy product to use.

18:34It's very cheap because we are using those stablecoin stablecoin rails. And at the same point, we still keeping the connect connectivity with the wider crypto ecosystem. That's why it's multi-chain because it's not just stablecoin that you can use but you also can use this product to use your old services. You can keep the still invest, you can still

19:02still buy crypto. And if you have and this product is going like is adjusted to everyday user. So like if you if your friend, if your parents, they want to have the first first time use crypto for the first time, that would be best because then they can very easily onboard and they can do it also with a partner that is well regulated.

19:31It's not a shady Asian exchange but actually actually someone who work with within ecosystem for years and speaks directly with governments across the world. That's really exciting and I would love to see more stablecoin payments. I'm curious on being a multi-chain wallet, what are the primary chains that you're focused on first or where you think the most

19:58traction will be for making payments? So, I think from like on just the from the user perspective, if you wanted to make transaction, if you wanted to make send send send crypto somewhere you the chain shouldn't be the first problem that you are trying to sort out. Like this should be so easy that you don't have to think about it. Of course, we have the main chain that we are

20:24working on today. It's base base chain, but it's EVM chain that is very fast, very cheap. But that's just technical solution. For us, the transaction the transfers should be as easy as just one click. And we of course support all the all the main chains in the in behind the scenes as I mentioned to let you still into invest and to still let you to buy crypto

20:52if you want and use it, but the key chain and I think it's just about making the transfer as easy as possible. And that's and that's what we are trying to abstract away so you don't have to worry about the technical details. Yeah, I completely agree and I only ask out of curiosity. I hope we can abstract all the chains away and most of them are not being used anyway

21:19in relative to you sort of the EVM main chain and base seems to become the leader with in terms of speed and cost. So, I think that's the right decision, but also not having to ask people what chain they're on, just be able to send like you would in the bank if you're sending to a US bank to European bank. You can say, "Well, are you guys on the Swift system

21:44or you on the other system?" Just send the money, you know. Yeah, exactly. Yeah, so what's the stage of the multi-chain wallet? Is it is it live now? People can can go and on

Yes. Yes, if you if you are in US, you can or Europe you already can access it. Just go to the App Store or Google Play and type Ramp Network and it's available across the across basically the entire

22:14world. So, play with it. Play it. Try to break it also. Tell us if you managed to. It's still a very early release. So, we are happy for to hear all the feedback, but I think already today we can offer value to everyone who would like to get into the stablecoin ecosystem today. Yeah, that's exciting. In terms of the growth of stablecoin

22:45payments versus on-ramp and off-ramp, I'm sure it's a slow but steady climb. What do you [clears throat] see as some major catalysts? You know, besides things like the genius act helping more medium small medium businesses actually be comfortable with using stablecoin payments. What [clears throat] can we do to increase that adoption of paying in stablecoins instead of

23:08having to do off-ramps and pay bank fees and things like that? Oh, that's very good question. I think that this type of process is not just something that happens in one year. Like it's going to take years. How many years it took to go from cash to cards? How many years it took to go from cards to Apple Pay? Like I would say that it's still not

23:35not not something that everyone is using. And Apple Pay or Google Pay. So, it's going to take some time. I think we need to be aware of that. At the same time, I think what's the best is just to have products and services that are better than the than the competition. Today, stablecoins offer something that other more traditional methods offer not.

24:04But I would argue that still some of those products are still not as good or not as easy to use because you have some technical complexity on the surface and we need to abstract this away. We need to make it as seamless as possible. And that's that's what we are trying to achieve. So, to make this easy to use for everyday user to not

24:34to avoid situation where you are for example need to deal with what chain I am I on. What type of stablecoin I'm sending? Like why? Why you should care? As a user, you should you shouldn't care. Like if you see if you see in one in one screen USDT, USDC, USDG and Polygon, Base and Arbitrum in you know, on one on one screen and then you start asking like

25:01what this is? Like I why why should I use it? We need we need to be We need to think user first. What's the value we are driving and to make it as again as easy as possible. Definitely. Well, I'm I'm wishing you and the team all the best on that and I think that it's a great vision to abstract all the tech away and just increase adoption of

25:29stablecoin payments for the benefits of the speed and the cost and not having to wait for things or only work 9:00 to 5:00 and payments can't be processed on the weekend. It sounds like something century that should have been solved centuries ago because

[laughter]

yeah, so If you are if you're waiting for your bank transfer to settle over that 48

25:56hours, you're doing something wrong. Like this is should shouldn't be the case. Definitely. What's the best way to check out that multi-chain wallet and also just to look into on-ramping and off-ramping solutions for Ramp Network? Sure, just go to your App Store, go to Google Play and type Ramp Network and we are there. Install, play with it, use it,

26:22share with your friends. Sounds great, Szymek. I appreciate the time and the insights into payments, stablecoins, everything. Wishing you and the team all the best with Ramp Network moving forward and increase that the stablecoin payment adoption and more and looking forward to following up in the near future. Thank you, Ashton. Thank you.