MoonPay is a popular Fintech startup founded in 2018 and is used to buy and sell cryptocurrencies using common payment methods such as credit/debit cards, bank transfers, and digital payments such as Apple Pay and Samsung Pay.
Through investors, MoonPay has been valued at more than $3 billion. This is due to their strong business model that is highly profit-making.
In a nutshell, MoonPay makes money through payment fees, processing fees as well as offering concierge services offered to wealthier clients.
What is MoonPay Used for?
The best part about MoonPay is that buying and selling cryptocurrencies have become as easy as transactions through an e-commerce store.
To use MoonPay, you will need to link it with one of the supported wallets. This is where the cryptocurrency that you buy will go into. Trust Wallet, one of the most popular wallets in the world, is supported by MoonPay.
To begin with, you need to sign up using an Email address. Then you will have to verify your account with that email address to get access to MoonPay.
To make full use of the platform, you have to get your KYC done. Under this, you have to verify your identity, payment method and provide address proof. Once all the documents are verified, you get a limit of transactions up to EUR 5000 per day or another currency equivalent.
In the event of any hacking or fraud transactions, MoonPay bears the charges. Apart from the personal exchange for buying and selling cryptocurrency, MoonPay offers its technology to businesses that they can integrate into their checkout process. Through MoonPay, the business will be able to accept cryptocurrencies as payment methods. Some of the business partners using MoonPay technology are – OpenSea, Zengo, etc.
Also Read: Is MoonPay Safe and Legit?
MoonPay Business Model
The Problem That MoonPay Solves
Before MoonPay, there was always some difficulty to purchase and sell cryptocurrencies, that is, it came with a lot of prior knowledge needed.
It was not easy for a newbie to deal with cryptocurrencies in general. Also, businesses found it hard to integrate payment methods and technologies on their checkout portal that could accept cryptocurrency.
This simple problem that MoonPay solves through its platform has scaled the revenue of Bitcoin.com by more than 500%.
The platform has also been proactive in accepting user feedback and ever since they made improvements, there has been a 250% increase in signups on the platform and 230% increase in volumes of transactions in the last few months of 2021.
Users and businesses using MoonPay have praised the platform but have raised concerns over its high payment and processing fees.
The reason MoonPay is in a position to demand high fees is because of lack of competitors in the market. This is also one reason MoonPay is making a lot of money while capitalising the bigger need.
Also Read: MoonPay Fees
How does MoonPay Make Money?
Let us look at each of the ways through which MoonPay makes money.
1. Payment and Processing Fees
The majority of the revenue for MoonPay comes via the payment and processing fees it charges to its customers using the exchange.
Whenever a consumer makes a transaction, they have to pay a minimum fee to MoonPay. If the purchases have been done through a card, it is 4.5% of the total transaction value.
In the case of bank transfers, the fee is 1% of the total transaction value for both sales and purchases. On top of this, users also have to pay gas fees that vary with the type of blockchain network dealt with.
Even for businesses, it charges a similar 4.5% fee for card payments and a 1% fee for bank payments. For bigger businesses that have larger transaction volumes per day, this fee can be negotiated.
Note that, although the fees are high, the entire payment and processing fee does not go to MoonPay. A portion of it is shared with the credit/debit card issuing company – Visa, Mastercard, or others.
On top of this, MoonPay also has to pay for other fraud detection services that it works with, to keep the platform safe. This also carries its fee.
2. Concierge Services
Although this is a smaller portion of its total income, MoonPay provides concierge services to affluent individuals.
In this service, MoonPay purchases and stores cryptocurrencies and Non-fungible tokens for its clients.
It is similar to the personalized wealth management service that is commonly seen in banks. This service has already been offered to celebs and influential people such as – Jimmy Fallon, The Weeknd, Lil Baby, and Post Malone.
But this service is not publicized much and not much is known about how much they charge these individuals. It is believed they do take a percentage management fee for providing this service.
The platform that has made it highly convenient for buying and selling cryptocurrencies using common payment methods, has undergone a huge blast in valuation.
As of December 2021, it has been valued at $3.4 billion after raising an investment of $555 million from Tiger Global and Coatue through the first round investment rounds led by them.
This also comes at a time when investors, in general, seem to be interested in investing in cryptocurrency, especially those with huge future potential when cryptocurrency could become the mainstream.
Also Read: How to Withdraw Money from MoonPay?
These are the ways through which MoonPay makes money. The startup has been successful because it makes the process so easy and seamless,
Therefore, many believe MoonPay is one of the best places to start with cryptocurrency if you are a newbie. With the growing number of users worldwide and increased penetration of different crypto coins, MoonPay is believed to grow even further.