Retail Adoption of Digital Currency

I was recently asked to hypothesize that Amazon has agreed to support the Swedish e-Krona, how would you update the payment experience to integrate the new payment method?

?The short answer is it depends on what type of design, policies, and regulations the Central Bank of Sweden implements to support the e-Krona.?

To help guide our assumptions, let's look at Sweden's current payment system and see what insights we might gain.

• In 2012, the Swedish government implemented a peer-to-peer real-time payment system called Swish.?Swish has been exceptionally successful. Today Sweden is effectively digital, operating on a near cashless basis.
• Given that Swedes are digital natives, it is highly likely all things digital will resonate with the market.
• Given the success of Swish, it's likely the Swedish government will want to maintain transaction transparency by giving the retail public the ability to pay peer to peer using the e-Krona while also adding commercial utility to pay for goods and services. Both can be achieved using a blockchain-based e-Krona which supports custodial wallets owned by the customer and held at a commercial bank.??
• There is a strong case for the government to retain the trust of Swedish citizens by allowing citizens to store value in a non-custodial wallet just like how a citizen might hold cash in their hand. This would be consistent with Swish whereby both tokenized and physical forms of the asset exist today.
• Finally, Sweden is most likely to be early, if not first to market, in CBDC and therefore representing an early, low-risk opportunity for Amazon to test, learn, and derive insights about CBDC and prepare for the larger eventual adoption globally.

Next, to help guide the frequency in which the e-kroner could be used, let us examine the Swedish payments data.

• According to data obtained by statista.com credit card usage has risen from 27% to 51% over the same period since the Swish has been introduced.
• The total value of credit card payments reached $302B in 2020, implying that since Sweden is near cashless, an estimated $291B is payments is processed by Swish.?
• As such, it would be reasonable to conclude that the citizens of Sweden would likely consider using the e-Kroner for payments on Amazon.com.

Given these assumptions, let us look at the customer payment requirements and experience on Amazon.com.

Pre-transaction payment requirements are likely to include:?

• Customer establishes an e-krona account with their Swedish bank setting up a public and private key
• The customer maintains sole control of the private key
• Amazon will provide a gateway, likely by operating a participant node, for the customer to connect to their custodial wallet within the e-Kroner ecosystem.

Payment Experience

The customer enters Amazon.com and adds an item(s) to the shopping cart and goes to checkout.

The customer is given payment options such as credit card and their bank account/debit card.

It is unlikely credit card gateways would be impacted.?Credit is a buy now pay later option and no credit card brands currently support a blockchain-based payment workflow.

The customer chooses a bank account/debit card as the payment option.?Customer old payment instructions need to be updated or new instructions need to be added.

I would envision the customer entering the bank account information one time and having this information stored in the Amazon customer profile.?

Once the information is accepted, I would envision Amazon automatically authenticating into a bank/payments service provider Node hosted within the e-Krona ecosystem.?Once authenticated, the customer would be asked to confirm the transaction by entering their private key – aka their digital signature. Once the digital signature is accepted, authentication would commence.?Amazon would never hold or know the customer's private key.

Upon the various nodes authenticating the transaction to the blockchain, the funds would be debited from the Swedish buyer’s account and deposited immediately into Amazon’s commercial account.

Authentication may not happen instantaneously due to workloads and design requirements.?Amazon would likely follow the current workflow of telling the customer “The order has been placed” and build a separate workflow if authentication across the nodes fails.

Anecdotally, similar to cash, I would suggest tokens held in non-custodial wallets, such as hardware wallets, would not be eligible to be used for payment until they are deposited into the customer's bank custodial wallet where transactions can be settled on-chain.

Lastly,?there are likely a few more day one considerations that are undetermined at this time and need to be considered when known, such as:

• Limits on daily withdrawal or deposit amounts.
• Limits on the size of the coins that can be used to pay.
• How ‘change’ will be handled if the coins in the customer wallet are not the exact amount of the purchase transaction.
• In the e-Krona world of same-day settlement, it would be to Amazon’s benefit to encourage same-day payment vs credit card payments. Perks and or discounts might be added to the payment experience to encourage users to try/use this option.

#fintechsolutions

#cryptocurrencies

#cryptocurrency

#digitalassets

#digitalsecurities

#finra

#securitiesregulation

#securitiesandexchangecommission

#moneylaundering

#amlcompliance

#blockchaintechnology

#bitcoinnews

#bitcointrading

#ethereumblockchain

#btcusdt

#tokensales

#icos

#stablecoins

#stablecoin

#amazonsellers

#cbdcs

#cashlesssociety

#EKRONER

#sweden

#centralbanks

#futureoffinance

#futureofretail

#ecommerce