How will Web3 payments go mainstream?

A big attraction at the Fintech Nexus Merge event was the panel on ‘How Web3 Payments Will Go Mainstream.’

The panel was moderated by Mauricio Magaldi, Global Strategy Director at 11:FS, in discussion with Nikola Plecas, Crypto Business Lead at Visa Europe, and Nick Charteris, General Manager at Crypto.com. 

Related:

Merchant adoption

Regarding consumers, Plecas sees the primary purpose of Web3 adoption as investing and saving.

Compared to merchants, he sees crypto as an asset that needs regulation, especially to classify on the balance sheet.

“There must be a regulator overlay to build trust like existing networks.” 

Adding on from this, Charteris thinks “digital commerce is widely accepted but accepting crypto needs more trust and security of this platform.”

His team’s work has allowed them to create an integrated merchant platform that integrates financial management systems. However, he acknowledges some merchants will only be comfortable using fiat options, so it is still a long way to go. 

In a recent report by Deloitte, nearly 75% of retailers plan to accept cryptocurrency or stablecoin payments within the next two years. Most merchants believe customer interest will increase over the next year.

So I think probably, we know we see an inflection point, whereas this was very nascent. Earlier on in the year, we’re now seeing more and more e-commerce players want to be able to accept crypto alongside traditional payments. It’s a matter of choice, you know, maybe 5% of the consumer base wants to accept crypto as a merchant, that’s great, I want to accept that, or I want you to pack on it,” explained Charteris.

Core challenges 

headshot of man
Nick Charteris, General Manager at Crypto.com

According to Charteris, some challenges for merchants using Web3 payments would be understanding their risk level and having adequate protections within the regulatory environment.

He then discussed the importance of regulatory compliance, “getting over their hurdles,” particularly in establishing consumer trust, and the “educational curve” that merchants need to overcome. 

“I think it’s an education that needs to take place. Retailers are adopting different online payment methods already. The point often, their checkouts are already congested. I’m sure you know multiple payment types, including buy now, pay later options. You know, not only have they got to figure out how and whether or not they can accept [Web3 payments] and hold it on their balance sheet and how they’re going to manage that.”

Since the cost of new technology can be driven down, integrating it would cost less, but more and more customers want it, which is the main reason for adoption. 

Plecas concurred, ensuring merchants see the monetary value of integration, starting with consumer demands.

In addition to these topics, he also discussed some challenges in regulating Web3 payments from a cross-border perspective and the importance of highlighting the risks and opportunities during onboarding.

Both panelists discussed the critical roles regulators could play in mass adoption. Regulation could stifle innovation, although it may spur circumventive innovation if the industry can find a path to escape the regulatory constraints.

CBDCs, stablecoins, and mainstream adoption 

Additionally, the panelists discussed the trade-off between CBDCs and stablecoins and mainstream adoption. 

Charteris explained, “Well, I think the first thing is you’ve got to be very clear about the difference between those two, but you probably wouldn’t have CBDCs without stablecoins or wouldn’t have stablecoins without crypto. And so it’s very, very important to categorize differences in stablecoins that exist between successfully, collateralized, and those that are not. From our perspective, when we take on different types of points, we have a very robust due diligence process. Local regulation, that’s, as before, we’ll take them onto our platform. And I think the same needs to be applied to CBDCs. They need the same governance within the same criteria to ensure they are robust. But also, I think they can all exist alongside each other in the same way that you know, cash and digital currencies, or digital payments, exist alongside each other.”

heasdshot of man
Nikola Plecas, Crypto Business Lead at Visa Europe

“I think both will play an important role, depending on the constituencies, and if there are big regional differences and, say, how Europe is approaching it [in comparison to] markets in Asia or Africa. So the big difference is that they play different roles but will coexist on the CBDC front. There are wholesale and retail use cases to address. There are also many design choices… I think we’ll probably have additional regulations which may differ across geographies,” Plecas added. 

The discussion ended with the panelists sharing the merits of blockchain, the need to create trust, and how they balance pre-existing payment methods with innovation. 

  • Helen Femi Williams

    Helen Femi Williams is a freelance journalist and podcaster interested in fintech, politics, economics, and their intersections. She is the host of the letsgetlitical podcast, a fortnightly show interviewing guests from all different sides of the political spectrum, in partnership with the Mozilla Foundation. Prior to this role, she worked as an innovation consultant developing insurtech and fintech products and ideas for brands, startups, and major corporations. She studied International Relations at the University of Nottingham (UK and Malaysia).

This article is part 8 of 8 in the series Merge 2022