Embracing Web 3 payments: who will be the pioneers of the future of transactions?

I’ve recently started diving into the fascinating realms of stablecoins, Web 3, and the Finternet, and it’s been quite an eye-opening journey. As Martin Luther King Jr. once said, ‘I have a dream’.

?Well, I’ve begun to dream too—of a financial future that could empower individuals and businesses to transact seamlessly and efficiently.

Exploring stablecoins, Web 3 payments, and the future of Finternet transactions

In my exploration, I’ve discovered that stablecoins have the potential to make cross-border payments not only faster and cheaper but also safer. I’ve also been fascinated by the technologies that underpin Web 3 payment infrastructure—think distributed ledger technology (DLT), artificial intelligence (AI), encryption, and many more. These innovations are designed to simplify payments to the point where sending money feels as easy as sending an email.

Then there’s the concept of the Finternet—a visionary financial system that promotes user-centricity, unity, universality, and interoperability across interconnected systems. It leverages unified ledgers and tokenization to create a more inclusive financial landscape.

Navigating the risks of the unknown in Web 3 and digital payments

But here's the kicker: understanding these components requires us to approach them with genuine curiosity and an open mind. Yes, there are risks involved; for instance, we don’t fully understand how sudden spikes in stablecoin demand might affect financial stability or money markets.

Some are concerned that Web 3 payments, particularly cryptocurrency, could be misused for illegal purposes like ransomware or terrorist financing. While it's true that the use of cryptocurrency in criminal schemes might grow, according to Europol, these transactions still make up only a small portion of the overall criminal economy compared to cash and other traditional forms of payment.

To uncover cases like these, we first need to understand them. Simply ignoring crypto doesn’t make it go away. A striking example is the case of Ilya Lichtenstein, who laundered over 120,000 stolen Bitcoin by converting them into tangible assets like Walmart gift cards and gold coins to hide their origin. This reveals two important insights: first, how closely traditional finance and Web 3 payments are becoming interconnected; and second, the critical need for a deep understanding of Web 3 to properly investigate and address such crimes.

However, if we embrace this change in mindset and shift our transaction behaviours, we can innovate this space and stay relevant for future generations. We can also dispel the fears that come with exploring these new, unknown territories.

These thoughts aren’t just my own—they reflect a collective belief in the potential of Web 3 payments. The idea is evolving from mere buzzwords into actionable solutions within both traditional and modern financial institutions.

The proof is in the pudding: real-world impact of Web 3 and digital payments

So, I encourage you to be curious, to ask questions, and to be pioneers in this journey. Here are some notable examples of how various organisations are leveraging Web 3 payments infrastructure:

• Anchorage Digital Bank: Received its charter from the Office of the Comptroller of the Currency in January 2021, becoming the first national bank to custody digital assets. Anchorage prioritises compliance as critical infrastructure, setting a precedent for how digital asset companies can operate within the US regulatory framework.
• PayPal: Completed its first business payment using PayPal USD (PYUSD), its proprietary USD-pegged stablecoin, to Ernst & Young through SAP’s digital currency hub. This transaction demonstrates how corporations can use stablecoins for instant payments. Read more
• SWIFT: Banks are preparing to trial crypto transactions on the SWIFT network as the industry shifts toward tokenization. Pilots will begin next year, with financial institutions using SWIFT’s platform to settle digital assets and currencies. Read more
• Visa: Launched the Visa Tokenised Asset Platform (VTAP) for banks to issue fiat-backed tokens, including stablecoins and tokenized deposits. The platform is currently in testing, with a pilot program expected in 2024. Read more
• Tether: Plans to introduce a new technology solution specifically designed for the European market to adapt to the evolving regulatory landscape in the region. Read more
• Ripple: Announced the global rollout of RLUSD, an enterprise-grade, USD-denominated stablecoin for institutional use, available on major exchanges such as Uphold, Bitstamp, and Bitso. Read more
• Wallets-as-a-Service Providers: Companies like Privy, Dynamic, and Portal offer ready-made wallet integrations that simplify key management and security for businesses. Additionally, on/off-ramp providers like Circle and Beam facilitate the regulatory complexities of moving between off-chain and on-chain currencies. Read more

Web 3 payments: embracing innovation and overcoming risks for the future of finance

I have to admit, it’s been interesting to watch how banks, once hesitant, are now gradually embracing stablecoins, tokenization, and digital assets—the backbone of the new Web 3 payment infrastructure. For a long time, many were held back by challenges like a lack of technical knowledge, regulatory uncertainty, and the fear of changing long-standing behaviours. But now, things are shifting. Banks are beginning to understand that this isn’t just about solving today’s problems—it’s about preparing for the use cases of tomorrow.

There’s a huge advantage for those who move first in this rapidly changing space. Those that act quickly, while focusing on delivering a seamless user experience, will be the ones to lead. And when it comes to adoption, encouraging users to change their behaviours through meaningful incentives could be the key to unlocking the full potential of Web 3 payments.

At its core, Web 3 payments are about transformation. We’re talking about systems that can operate 24/7, that offer composability, and that can execute multi-asset transactions in a way that was unimaginable before.

As banks continue to experiment with digital currency payments, we are seeing the beginnings of a financial revolution—one that echoes the ‘I have a dream’ sentiment we started with. Just as that dream called for bold action and change, today’s innovators have the chance to reshape the future of finance. This journey is no longer just a vision; it's becoming a reality. And you can count on us at The Paypers to keep you informed every step of the way. So, stay tuned—there’s so much more to come, and the dream is only just unfolding!