Crypto payment systems continue to be installed at a rapid pace
Crypto Payment Systems: Despite the looming fear of an impending recession, the global financial industry continues to develop at a rapid pace, says Dmitry IvanovCMO for CoinsPaid.
This is partly due to the covid pandemic, which led to growth in demand for digital payments and more efficient ways to settle transactions.
Consequently, this demand accelerated the development and adoption of innovative financial technology solutions. Such examples include biometric verification, digital IDs, IoT-enabled transactions, e-wallets, and payment methods integrated with instant messaging apps.
But what is the role of cryptocurrency in this evolving payment system?
Wall Street is watching crypto
Until recent years, it was common for players in the financial industry to loudly criticize cryptocurrencies. They were often associated with illegal transactions, Ponzi schemes and historical market bubbles. But as digital assets have matured, many have begun to see their potential.
JPMorgan serves as an excellent example here. JPM CEO Jamie Dimon called Bitcoin “a scam” back in 2017. But the investment banking giant now has a dedicated crypto division with over 200 employees (Onyx Digital Assets). And it seeks to tokenize shares and serve as a DeFi bridge.
And JPM is not the only financial giant looking at crypto. Bank of America, Goldman Sachs, BlackRock and many others have already introduced it, or are currently developing their digital asset-based offerings.
Crypto payment systems: Adoption
Outside of Wall Street, businesses are increasingly using digital assets for payments. Deloitte recently published the results of the Merchant Adoption of Digital Currency Payments survey.
2,000 senior executives of retail companies in the United States last December were asked. The study’s findings show that 85% of respondents gave a high or very high priority to enabling cryptocurrency payments. At the same time, nearly 75% reported plans to accept stablecoins or other digital assets in the next 24 months.
Furthermore, major brands, such as Microsoft, Gucci, AT&T, Starbucks, KFC and Burger King, accept cryptocurrency payments for their products and services, with this list growing every day.
Payments giants are also increasingly leveraging crypto to attract new customers and meet changing consumer demands.
PayPal launched a service in October 2020 to allow US users to buy, sell and hold coins. However, Visa and MasterCard are seeking to integrate cryptocurrency payments directly into their systems. As a result, more merchants may begin accepting digital assets while making it easier for consumers to use them to settle everyday transactions.
While consumers wait for that to happen, crypto-backed debit card adoption has been on the rise. Visa reported $2.5 billion in digital asset revenue for Q1 2022. Accepted by millions of merchants, cryptocurrency cards act like regular payment cards. The main difference between the two is that holders use digital assets with the former, which are automatically converted to fiat currencies at the time of transaction.
An alternative to conventional payment methods
In addition to merchants, luxury brands, financial services companies and Wall Street giants, the demand for crypto transactions among consumers is also increasing. In fact, according to Deloitte, 96% of business customers surveyed indicated either significant (64%) or moderate (32%) interest in using cryptocurrencies for payments.
And this should come as no surprise.
Unlike bank transfers and credit card payments, digital asset transactions do not need an intermediary to reach the recipient’s wallet safely. For that reason, they present a cost-effective option for consumers to settle their daily payments with near-instant transfers.
Also, consumers can leverage stablecoins for their payments to eliminate risks associated with the increased volatility of cryptocurrencies. At the same time, businesses can use crypto processing services that automatically convert customers’ volatile digital assets into fiat currency to avoid the effects of price fluctuations.
Crypto payment systems: The transition
Although prices are significantly down from last November’s peak, crypto adoption is looking better than ever. Financial companies, retailers and big brands are rushing to meet the growing consumer demands for payments with digital assets.
Of course, the move to crypto will also benefit individuals. On the one hand, investors can use their holdings to cover expenses without converting their digital assets into fiat currencies. At the same time, cryptocurrency will simplify daily payments for consumers. They offer lower fees, faster settlement times and no need to rely on the services of financial intermediaries.
However, I think the industry needs more regulatory clarity and a positive government attitude towards the industry. It would accelerate the transition to crypto transactions in the evolving payments landscape.
Crypto payment systems: regulation
Despite the positive trends we have explored in this article, digital assets are unregulated or semi-regulated in many jurisdictions. And due to the lack of clarity, businesses are still hesitant to adopt crypto payments.
On the other hand, a crypto-friendly regulatory framework like the UAE’s could promote growth and adoption. After the Ruler of Dubai issued the emirate’s Digital Assets Law in February 2022, many blockchain firms set up offices in the city to tap into the local market. Consequently, business crypto adoption has increased in the UAE, with luxury property developer Damac, Day to Day Hypermarket and Emirates airline announcing plans to accept digital asset payments.
That said, proposed legislation such as the Responsible Financial Innovation Act (RFIA) in the US or the EU’s Markets in Crypto-Assets (MiCA) could help create frameworks around digital assets that could encourage their adoption for payments.
About the author
Dmitry Ivanov is the CMO of the crypto payment ecosystem CoinsPaid, an ecosystem of cryptocurrency products that aims to satisfy the world’s daily needs by leveraging blockchain technology and crypto payments. Dmitry is an expert in crypto payments and crypto adoption with extensive experience in business development and marketing.
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