Everything you need to know about crypto payments in 2022-2023
To reach the unimagined possibilities of Bitcoin, crypto and blockchains in general, we wanted to understand the space better and find out what’s driving the huge amount of ongoing payment technology innovation happening away from areas where crypto is seen primarily as a speculative digital asset. Also to understand the opportunities and obstacles that lie ahead for crypto adoption as payment method, we conducted our first ever “crypto for payments” survey from June to September 2022. Also, based on extended research we tried to survey the crypto companies building the new ‘crypto infrastructure and products’ to help you, the reader, understand the main players in this space.
And we included everyone in The Paypers’ upcoming crypto payment report, to be out in November. This article aims to understand the “why” behind the work done around our crypto report.
If you would like to receive a copy of How to use crypto payments and Web 3.0 for banks, merchants and PSP reports from The Paypers, you can express your interest here.
The crypto wave
Since Bitcoin’s inception in 2008, the crypto industry has been on an upward trajectory, despite the bumpy journey that cryptocurrencies have had so far. Over 300 million people worldwide, regardless of age and background, have heard of Bitcoin and cryptocurrencies and trade with it. People have seen ads about crypto on YouTube, TV, online newspapers, during the Super Bowl, etc. Famous people (Cameron and Tyler Winklevoss, investors in the privately held Gemini exchange) and large regulated financial institutions (JP Morgan Chase, PayPal, Goldman Sachs, BNY Mellon) actively exploring this area has also spurred crypto’s visibility.
Research done by Deloitte in collaboration with PayPal shows that merchants believe many of their customers currently have a significant interest in using digital currencies for payments. Moreover, they are convinced that customer interest will increase over time, and almost 75% reported plans to accept stablecoin payments, and almost the same reported plans to accept cryptocurrency payments, both by 2024. Refinement of the regulatory framework around crypto has also triggered great interest in this room. If the industry players complained a few years ago because there was a lack, things are developing slowly and The cryptocurrency regulatory landscape has become very dynamicboth within national jurisdictions as well as at the global level (if you think of IMF and BIS active engagement).
The benefits of crypto payments
The new ‘crypto-infrastructure and products’ proposed by the cryptocurrency sector enable people and businesses to transact directly with each other, without institutions needing to act as intermediaries. By ‘crypto infrastructure and products’ we meant base tokens and their infrastructures (stablecoins, bitcoin, Ethereum, Ripple, etc.) and services such as exchange, payments, lending, loans and insurance.
These are also known as DeFi – decentralized economy. DeFi can potentially reduce costs and increase the speed of payments by eliminating friction in terms of technology, contracts and coordination between multiple parties. According to Douwe Lycklama, INNOPAY co-founder, “This is expected to impact many functions of today’s payments and securities market infrastructures, such as clearing houses, RTGS, secure messaging, custody, exchanges and foreign exchange services. Digital assets enable businesses to put their idle cash to work for them. It is also possible to achieve returns by investing in decentralized lending pools such as Aave and Compound’.
INNOPAY/The Payers Payment Industry Crypto Monitor
To understand how far crypto has advanced in the payments industry, over the summer INNOPAY and The Paypers surveyed banks, payment institutions, vendors, merchants and AP/AR departments to gauge their interest in crypto infrastructure, tokens and services. Not surprisingly, the first edition of our Payment Industry Crypto Monitor has revealed that 88% of respondents expect crypto to have an impact on today’s payment infrastructure, which is why some are already ‘testing the waters’. Many of the respondents see various crypto-related opportunities and are keen to pursue them, but are still very much at the exploratory stage: reading and researching the crypto opportunities (53%), talking to customers (43%) or preparing decisions for use or going on the market (26%).
To summarize
The technology stack behind crypto payments not only has the potential to change the way people pay, but to reinvent the very dynamics of the digital economy. This is caused by the rapid pace of new regulations changing (countries banning and then quickly adopting crypto – e.g. Russia) and technology evolving (e.g. the Ethereum merger).
As we can notice, there are both means and ways to get the perfect payment experience. For this new digital era to bring meaningful changes and improvements to our society and environment we need strong regulatory frameworks – which is ongoing – as well an informed and educated community of businesses and consumers with the knowledge and power to shape this space. We are confident that the report How to Leverage Crypto Payments and Web 3.0 for Banks, Merchants and PSPs provides the basis for this important knowledge.
If you would like to receive a copy of How to use crypto payments and Web 3.0 for banks, merchants and PSP reportscan you express your interest here.
About Mirela Ciobanu
Mirela Ciobanu is editor-in-chief for the Banking and Fintech domain at The Paypers. She is actively involved in preparing industry reports, conducting interviews and writing about the digital assets industry, the regtech space, digital identity, fraud prevention and payment innovation. Mirela is passionate about finding the latest news on crypto, blockchain, DeFi and fine crime investigations and is an advocate for the need to keep our online data/presence protected. As a writer, she aims to always get the best available version of the truth. She can be reached at [email protected] or via LinkedIn.
