The future of payments - can crypto play a major role?

支付的未来-加密货币能发挥重要作用吗？

Tương lai của thanh toán - tiền mã hoá có thể đóng vai trò chính không?

مستقبل المدفوعات.. هل يمكن لـ العملات المشفرة أن تلعب دوراً رئيسياً؟

Cryptocurrencies have rapidly evolved from digital novelties to trillion-dollar technologies that have the potential to disrupt the global financial system. Bitcoin, along with hundreds of other cryptocurrencies, is now considered both an investment asset and a currency for purchasing goods and services.
The first documented purchase using Bitcoin involved the buying of takeaway pizzas in 2010. Laszlo Hanyecz spent 10,000 BTC, which was worth about $25 at the time. If he had held onto that bitcoin until its peak in 2021, he would have been worth nearly $700 million. Despite this missed opportunity, Hanyecz has no regrets, as he believes someone has to get things started.
Today, there are numerous options for spending cryptocurrencies on consumer goods. Starbucks accepts crypto payments through the Bakkt app, while Home Depot allows payments in various coins through the Flexa checkout systems in its stores. Based on <a href="https://www2.deloitte.com/content/dam/Deloitte/us/Documents/technology/us-cons-merchant-getting-ready-for-crypto.pdf">research</a> conducted by Deloitte, around 15,000 businesses worldwide accept Bitcoin. There is a strong desire among both merchants and consumers to shift to crypto, with 85% of organizations prioritizing enabling crypto payments and 64% of consumers showing significant interest in digital currencies.<h2>The benefits of using crypto rails for payments</h2>
The advantages of using cryptocurrencies for payments are becoming increasingly evident. They offer faster processing times, higher transparency, and lower transaction fees compared to traditional payment methods. Direct crypto payments from customers incur no cost, and the maximum transaction fee is typically 1% when routed through tools like Coingate or Bitpay. In contrast, credit card processors typically charge a fee of 2.9% plus 30 cents per transaction.
Digital currencies, especially cryptocurrencies, are gaining traction across industries and use cases, contributing to the growth of global payments volumes. They have the potential to reduce costs associated with domestic and international payments, which is a primary benefit recognized by over 50% of respondents in a Ripple <a href="https://ripple.com/reports/Blockchain_and_Crypto_in_Payments.pdf">survey</a>. Blockchain technology and cryptocurrency can also enable faster cross-border payments, potentially saving financial institutions up to $10 billion by 2030.<h2>Challenges: price volatility and ambiguous regulations</h2>
While cryptocurrencies offer these advantages, their volatility poses a significant challenge. The price of Bitcoin and other cryptocurrencies can fluctuate dramatically, making them less attractive for everyday transactions. However, some businesses accept Bitcoin, and many investors view it as a speculative asset akin to gold. In countries with weak currencies, cryptocurrencies like Bitcoin have gained popularity. For instance, El Salvador made Bitcoin legal tender in 2021, allowing residents to use it for tax payments and settling debts.
But there is a way to avoid volatility altogether. Stablecoins have the potential to rival fiat currencies as the dominant form of payments as they are cryptocurrencies pegged to traditional currencies, such as the dollar, ensuring their relative stability. They can be used for instant transactions without the fees associated with credit cards or remittance services. Stablecoins also provide an opportunity to include millions of people without traditional bank accounts in the financial system.
However, accepting crypto payments comes with technical and compliance challenges. Wallets or crypto banking services need to be chosen, and compliance with regulations must be ensured. The rise of cryptocurrencies and decentralized finance has raised concerns about fraud, tax evasion, cybersecurity, and financial stability.
Governments worldwide are crafting regulations for the emerging sector, balancing the need to mitigate risks while fostering innovation. Some central banks are considering introducing their own digital currencies, known as central bank digital currencies (CBDCs), to offer the benefits of cryptocurrency with reduced risks. However, this has been met with skepticism by many in the crypto community.
Things are moving in the right direction
One area that is seeing significant development is the integration of cryptocurrencies into existing payment platforms. Major payment processors and fintech companies are recognizing the demand for crypto payments and are working on enabling seamless integration. For example, PayPal has allowed its users to buy, sell, and hold cryptocurrencies since 2020, and it plans to enable crypto payments at millions of merchants worldwide. Square, another prominent fintech company, has integrated Bitcoin into its Cash App, allowing users to buy and sell Bitcoin and use it for payments.
Advancements in technology are making it easier for merchants to accept crypto payments. Payment gateways and service providers are emerging that offer solutions specifically tailored to crypto transactions. These providers handle the conversion of cryptocurrencies into fiat currencies in real-time, reducing the volatility risk for merchants. They also offer enhanced security measures to protect against fraud and ensure compliance with regulatory requirements.
There is also a growing number of startups focused on building crypto payment solutions. These startups are exploring innovative ways to facilitate crypto transactions, such as developing contactless payment cards or creating user-friendly mobile wallets that make it simple for individuals to manage their crypto assets and make payments. These solutions have made it easier for companies like Shopify, which has integrated with crypto payment processors, allowing merchants to offer cryptocurrency payment options to their customers.
And lastly, the use of cryptocurrencies for cross-border payments is gaining traction. Traditional remittance services are often costly and time-consuming, especially for international transfers. Cryptocurrencies offer a faster and more cost-effective alternative for sending money across borders. Blockchain technology enables peer-to-peer transactions without the need for intermediaries, reducing fees and settlement times. <h2>What the future looks like</h2>
The future adoption of cryptocurrencies for payments is projected to increase significantly. A large majority of respondents in the Ripple survey believe that blockchain technology and cryptocurrency will have a significant role in enabling faster payments within the next three years. While regulatory ambiguity remains a barrier, as demand for crypto payments grows and regulatory frameworks develop, the path to broader acceptance becomes clearer.
The transformative potential of blockchain and cryptocurrencies in the payments landscape is undeniable. Reduced costs, increased transaction speed, and increased financial inclusivity are just a few of the benefits that cryptocurrencies can bring to the payments industry. As more businesses and consumers adopt cryptocurrencies for payments, it is expected that the infrastructure and tools supporting these transactions will continue to improve.

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