The lightning-friendly Fold App, which allows users to spend bitcoin on goods like clothes and pizza and then earn bitcoin-back rewards, just added fiat capability after raising its first round as an independent startup.

Fold product lead Will Reeves told CoinDesk the startup spun out of Thesis with a $2.5 million raise led by Craft Ventures, CoinShares, Slow Ventures, Goldcrest Capital and Fulgur Ventures, among others. Reeves said that capital will go towards cementing partnerships, both in the cryptocurrency and retail space.

“We’ll be rolling out subscription options for merchants and consumers soon that will provide premium services and highest rewards,” Reeves said, adding:

In short, the app can be connected to a debit card for bitcoin-back on regular purchases through the app, or users can send bitcoin to the Fold App from their independent wallets. A mobile Fold App with the full features currently available via desktop, Reeves added, is slated for launch in October. Until then, the mobile app is also available to users that sign up through Fold’s website for early access.

CoinShares co-founder Meltem Demirors told CoinDesk Fold App is unique, compared to other retail-focused bitcoin apps, because it encourages users to use non-custodial wallets.

“I’m excited to work not only with Fold, but also with our community of portfolio companies, corporate partners, and other service providers to build an integrated user experience around bitcoin payments,” she said.

While there are several other retail-focused crypto apps gaining traction, like Lolli and Flexa, Fold is the most focused on lightning payments. Fold App is already integrated with two lightning-friendly wallets, BlueWallet and Breez. This is what attracted Fulgur Ventures partner Oleg Mikhalsky to the investment.

“We believe the lightning network has the ability to become an interesting payments rail for various applications due to features like instant final settlement, cost-efficient micro-transactions, the ability to ‘stream’ payments and the support of other assets over Lightning in the future,” Mikhalsky told CoinDesk, adding:

Lolli told CoinDesk in July that it, too, was planning to eventually add lightning options. So it remains to be seen how the retail app race will play out.

In the meantime, Fold is offering a type of crypto training wheels to retailers like Macy’s, Target and Amazon. On the merchant side, they only see a payment processed by Fold, not the users’ credit card or bitcoin wallet address. This offers more privacy than directly shopping via the merchant’s website. Fold then cashes out the payment for merchants, which typically choose to receive the value in fiat.

“We can settle in fiat or bitcoin, yet all major merchants choose to settle in fiat now so they don’t take volatility risk or accounting overhead,” Reeves said, adding:

Macy's image via Shutterstock