The rise of financial technology and digital payment solutions is helping the world go cashless. Cashless payment methods now cover a wide range of technologies – there are physical cards, online gateways, mobile apps, and digital wallets. Blockchain-enabled payments and cryptocurrencies are also on the rise.
Methods are enjoying varying rates of adoption but one thing is for certain – more people are willing to go cashless.
A Gallup poll showed that only 24 percent of Americans are using mainly or mostly cash. Another poll showed that 62 percent of people in the US think that they may see the death of cash within their lifetime.
Among these methods, it’s blockchain that’s driving the major disruption of financial services. At its core, blockchain is an immutable record book. It keeps a record of all transactions made on the system making it a fantastic tool for financial services. With regard to payments, these developments are creating new ways for people to pay for their transactions.
Cryptocurrencies have emerged to challenge fiat currencies. Bitcoin is worth nearly $3,000 and those who have dismissed it as a fad might be feeling a tinge of regret not investing in it when it was just starting. A $50 investment in bitcoin in 2010 is worth millions today. Other currencies are on the rise as well. Ether and bitcoin cash, the second and third biggest cryptocurrencies, are worth around $270 and $380 respectively.
As more people invest and acquire these cryptocurrencies, merchants would do well accepting them for payments. More countries are declaring them legal. As such, cryptocurrencies are now finding use even in brick-and-mortar retail. In a major move, Japan declared bitcoin legal which prompted major retailer Marui to start accepting bitcoin for payments.
Plastic cards remain relevant and not just because of how established they are in brick-and-mortar retail. They are also widely used as funding sources for many of today’s online payment gateways and digital wallets. For instance, PayPal, Apple Pay, and Android Pay are still funded mainly by credit or debit cards. Blockchain, however, can change this. Cryptocurrency-backed wallets don’t need to be linked to any other account which adds to their ease-of-use compared to these card-funded wallets.
In addition, blockchain mobile wallets could even serve as comprehensive platform for money management. UK-based bitcoin bitcoin wallet and debit card provider,Cryptopay offers a mobile wallet that lets users store and manage their bitcoin.
Users are able to send and receive bitcoin through their account and even sell bitcoins for euros or pounds. As an added option, they also offer users debit cards that are linked to their accounts. Thus, users can readily use their bitcoin to pay even if a merchant only accepts plastic cards and fiat currencies.
The company has big plans as the following illustrates.
“Many developments have already taken place that has accelerated the awareness and adoption of Bitcoin across the world. ATM’s, new currency exchanges, Bitcoin debit cards, educational programs, financial products being launched en masse and sensible regulations are all playing big roles in ramping up Bitcoin’s adoption.”
Companies like Cryptopay are truly banking on bitcoin and other cryptocurrencies as the de facto currency of global commerce. This type of radical futurism might indeed be the only way to drive mass adoption.
Blockchain and cryptocurrencies are also becoming valuable mechanisms for cross-border transactions and remittances. As blockchain technology matures, platforms are able to process virtually real-time transfers. Unlike traditional transactions that are often routed by payment processors through banks and clearing houses, blockchain transactions happen within the system so transactions complete quicker.
As a decentralized and distributed infrastructure, blockchain also costs less to maintain and operate allowing service providers the ability to charge less for their services. Bitcoin and blockchain remittance are proving to be popular in countries with deployed migrant workers. For example, the Philippines has an estimated 2.2 million overseas workers. Blockchain remittance services such as SendMoney.ph and Rebit.ph allow these workers to send money back home more affordably.
In addition, blockchain transfers can retain their full value in the cryptocurrency they were sent in. This is opposed to transfers in fiat currencies which are often converted to the destination country’s currency often with disadvantageous rates for the receiver.
Among the appeals of going cashless is how it lets people avoid mishaps like getting their money stolen or physically losing bills and coins. In those cases, cash is often lost forever. Cashless users may also lose their phones but digital wallets are protected by several layers of security including the phone’s security and the app or service’s security measures so their money is kept safe.
One of the concerns regarding blockchain’s security is that it allows for pseudo-anonymity. Bitcoin users need not divulge their full identities in order to send or receive bitcoin. However, the great thing about blockchain is that all transactions are traceable. In addition, blockchain services are starting to be regulated by governments.
They have to comply with know-your-customer (KYC) and anti-money laundering regulations so using these platforms offer increased levels of security. Blockchain startup Civic even focuses on using blockchain to offer identity verification for businesses allowing for safer and verified transactions for everyone.
A Blockchain Payment Future?
Blockchain is set to change the way we handle money. Cryptocurrencies are currently enjoying a boom which means services can ride the high and gain traction. It only takes one service to reach critical mass in order to legitimize a technology and many of these startups are already showing promise. Consumers may have yet to fully warm to these blockchain services but the potential is truly there.