The Future Of Payments Is Here: How Can Crypto Play Its Part?
Cryptocurrencies hold an interesting potential as a means for cheap, quick and global payment transactions.
Payment, for goods and services, is something that has been going on since the dawn of humanity. The only change has been how it has been enacted. From bartering to cryptocurrencies, methods of payment have changed dramatically throughout human history, and we are in the midst of another wave of change.
Many will feel that cryptocurrencies are the catalyst for the newest payment revolution, but those predictors are probably getting ahead of themselves. Although crypto certainly works for new and different payment methods, it is embryonic compared to the real latest trend.
Payment apps and portals are where the future of money and payment are heading. Not only is it the convenience, but it is also the added uses that can come from an app that is driving this new wave of adoption.
Austin Kimm, COO of Crypterium, a cryptocurrency wallet that is aware of the advancing of payment possibilities, notes how the change in payment options differs around the world, and in different markets.
“It is possible that these payment apps will replace cards and cash, but different technologies will be successful in different markets,” said Kimm. “In China payments are now dominated by WeChat and Alipay, QR readers that when combined are now much more significant than cards or cash. What is unique is there is no restriction to younger more tech-savvy users, but reaches all age groups.”
Luckily for cryptocurrency enthusiasts, there is a growing trend for these types of payment apps to embrace and enhance, their offerings with cryptocurrencies, creating a symbiotic relationship. The fact that payment apps offer cryptocurrency investing and spending opens up their market to a growing number of people, and at the same time, these apps are normalising and helping adoption of cryptocurrencies into the mainstream market.
So where does the short to mid-term future of payments lie? Cryptocurrencies will play their part, but their future is probably more long-term than the age of the payment app. More so, what will payment apps and portals look like? for in today’s market, one function is not nearly enough.
The new generation, the more generation
Even in today’s world, one can notice a change that has been making its final moves. Cash is slowing being phased out for more virtual forms of currency. Money can now be stored on a plastic card with its digital links to the bank and payments made with relative ease at brick and mortar vendors, as well as online.
The virtual payment portals set up through banks, and backed up with credit and debit cards, allows for much more ease of payment, and efficiency; it is something that has developed due to an increasing digital demand.
But as the digital demands of people advance, so do the payment offerings. China’s WeChat is an example of a payment system that started as one thing and has moved with the times to embrace a different way of making payments.
“WeChat started with the ‘lucky money’ or red packets when friends and family send money as a gift, and this then spread to practically all forms of payments,” Kimm goes on to explain. “But what makes WeChat unique, in addition to its 1 billion daily users, is that they are much more than just a payments solution, you can do practically everything in everyday life through their platform, from booking a doctors appointment to ordering a meal.”
“It is possible that this path will not be the repeated in other markets, but it appears that a dedicated payments solution needs to do much more than just payments. As people become more comfortable with the services then these service’s popularity will increase, but to make the step so that they become the de facto payment solution, it is very likely that the service needs to be much more than payments; there has to be a use case beyond payments.”
Cash has always been limited by the fact that it can only function in one instance; between parties that are present. Card payments changed that by allowing users not necessarily to be present when making payments, and of course, digitalising the whole matter.
What Kimm is stating is correct, the draw of payment apps, much like the smartphones they operate off, is their multifunctionality.
A cryptocurrency offering
Cryptocurrencies, as still very much a misunderstood form of payment, get their foot in the door thanks to payment apps and their multifunctionality. Apps, such as Circle, Square, and even Revolut, have integrated cryptocurrency buying and selling, as well as spending in some instances, to attract new, savvy, customers to their portals.
It again goes back to the multifunctionality for people can not only use their standard virtual cash to buy and pay, but they can also invest and follow the cryptocurrency markets all in one app.
For the app creators, they are hitting the right notes by allowing cryptocurrencies, which are still very nascent, to attract a new type of user. But they are also doing a huge favour to the general cryptocurrency market as these digital tokens are being compared to something very similar to virtual cash.
“While the hype surrounding cryptocurrencies is intensifying in the financial service sector, now is too early for any immediate practical usage of cryptocurrency on a mass scale. Still, some forward-thinking banks and financial services have recognised the value of blockchain,” Richard Yao, Senior Associate of Strategy and Content, IPG Media Lab, explains how, in a slightly different manner, through the example of XRP, cryptocurrencies are being used to entice new business, but also to normalise what could be the next, next, wave of payment possibilities.
“While the hype surrounding cryptocurrencies is intensifying in the financial service sector, now is simply too early for any immediate practical usage of cryptocurrency on a mass scale,” he says bluntly. “Still, some forward-thinking banks and financial services have recognised the value of blockchain, the underlying technology powering cryptocurrencies, and started to incorporate elements of blockchain distributed network design to revamp their services.
“For example, more than 100 banks have signed up with Ripple, to transform cross-border transfers with blockchain. AmEx is piloting a blockchain-based loyalty program with Boxed to offer more personalised rewards for customers.”
Kimm also adds that with increased adoption, and use-cases, especially when it comes to spending, there will be a higher drive in the use of cryptocurrencies as a currency. However, the transition for people accepting cryptocurrencies will be critical, and it will likely be a bit of a process.
“Cryptocurrency and payments are tied at the hip. For Cryptocurrency to be mainstream, there needs to be a daily use case, which in the long run means you must be able to spend it. The more you can spend it the more people will be willing to accept it. At the start that spend will more often than not require a transition from crypto to traditional money. Retailers, employees will not be willing to accept the transfer cost themselves or accept the currency fluctuation risk. Try spending Euro’s in New York, and you will not get far, so there is no reason to assume they will suddenly start taking Bitcoin when the risks are seen as even higher. So payment companies have a role in facilitating this transition,” Kimm said.
If payment apps do have the current inside lane while cryptocurrency payment options are still mulled and explored, then one has to wonder what these cryptocurrency exchanges and payment solutions will look like in the future.
Kimm has already explained the success of multifunctionality, and for cryptocurrency wallets and exchanges, this is the next step due to the nature of digital currencies and the entire digital realm they occupy.
“One or two exchanges will simply be the best exchange they can be,” Kimm said, predicting the future of cryptocurrency-based payment solutions. “But most will expand by building an ecosystem of additional services, such as investment management tools or safe storage, and many will move towards other exchange services such as remittance payments or daily transactions in everyday life.”
“We are offering crypto buying, selling, sending and spending, even borrowing and a stock exchange system ; there is a lot that people want their money to be able to do. I believe that very few companies will be successful by just being a great exchange, so the route to success for most will be to build an ecosystem that people need for everyday life.”
The way in which people are making payments has been continuously evolving as new wants and needs emerge from the population. The path to mass adoption and acceptance always varies, but what is good to see is the potential of cryptocurrencies are being pushed by a payment method that has already made great strides to be the immediate future – payment apps.
Cryptocurrencies are almost ahead of their time, and there needs to be a stop gap – which can integrate with their possibilities – before there is a real adoption of cryptocurrencies for payments. If cash apps can do that, while offering cryptocurrency options in their multifunctional mandate, then the path for crypto payment adoption is already laid out.
According to Forbes