Money makes the world go round is an old saying, but what if the current system makes moving money hard? Traditional ways of settling financial transactions are sluggish and expensive when compared to crypto payment solutions. Ripple and US Faster Payments Council (FPC) have released a report on how blockchain and crypto are transforming how money moves. It discussed the opportunities of crypto-enabled payments and what providers should expect next.
The report “Transforming the Way Money Moves” conducted a survey that included almost 300 payment leaders from 45 countries. Respondents ranged from analysts, directors, vice presidents, and executives. They represented several sectors which included fintech and banking.
The Survey Reveals Most See Benefits from Crypto
Ninety-seven percent of the respondents believe that blockchain and crypto will enhance the speed of transactions within the next three years. This is not surprising since blockchain technology is designed for speed and security.
Over fifty percent believe that crypto will be accepted by most merchants within the next 3 years. Respondents from the Middle East and Africa are even more bullish. More than 27% of the leaders believe that it will happen within 1 year and 64% within 3 years.
More than 50% of the respondents believe that lower costs for international and domestic payments are crypto’s primary advantage. Transaction fees via traditional routes like PayPal may charge as much as 4% per transaction. According to the World Bank, the average global cost of sending $200 is between 4.8% to 6%. This is exorbitant when compared to each crypto transaction which could cost as little as a few cents.
Regulatory Clarify is the Number One Barrier
The respondents were also asked what barriers prevent their organizations from adopting blockchain technology for payments. Eighty-nine percent said that it was regulatory clarity. This is understandably a big issue since businesses need to comply with laws. It does not help that Whitehouse has issued guidelines on how to handle digital assets which approaches crypto as a risk that needs to be mitigated.
From Barter to Blockchain and Crypto
Paying with a credit card or with a payment application is normal nowadays. These modern conveniences were not available to our ancestors. Barter was widely accepted as a mode of payment before money was invented. For example, people would barter items such as food, clothing, or tools for other goods or services they needed, such as shelter or transportation
History tells us that the barter system was eventually replaced by currencies. According to historians, the first regulated coins were first minted in Lydia (present-day Turkey) between 610 BCE and 560 BCE. Coins eventually evolved to paper money. Modern payment methods now include credit cards, apps, and crypto.
Below is a video about the evolution of money and payment.
Crypto as the Next Evolution of Payment and Movement of Value
The evolution of payment was borne out of necessity. If the barter system was still the norm, then we would be dragging a piece of furniture in exchange for a few dozen eggs. The current system of using money and paying via several channels like remittances, credit cards, and apps has made lives easier. But it is not perfect. Payment leaders themselves acknowledge that the traditional payment network is slow and expensive.
A 2022 Chainalysis report shows that emerging economies lead in crypto adoption. This is partly driven by users who use the crypto network to remit money. This gave those with limited bank access the ability to transfer assets quickly and cheaply. The report shows that crypto is doing its goal of democratizing the financial system.
Everybody in the crypto space knows that Bitcoin was created by Satoshi Nakamoto to empower its users. It gave users the option to transfer something of value quickly, securely, and cheaply. This is the next evolution of payment, a new system designed to bring value to the most number of people.
Ripple Labs is an American technology company that focuses on providing solutions for cross-border payments. It is known for its crypto token XRP. The company is currently in a legal battle with the SEC.
About Faster Payments Council
The Faster Payments Council (FPC) is an industry-led organization that was created to facilitate a world-class payment system. It was established in 2018 to improve the speed, efficiency, and security of electronic payments in the United States.
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