Web3 and the Future of Payments

October 10, 2022

With Money2020 less than two weeks away, our team is gearing up to discuss Web3 strategy across the fintech industry and every ecosystem within that umbrella — catch up on our past articles about what Fintech needs to know about Web3 and Neobanks and Blockchain. This week, we’re previewing those conversations with an overview of what Web3 can mean for Payments.

‘Payments’ is one of the largest ecosystems in the financial technology industry — the term that includes everything from point of sale technology to payout companies to money movement. Everything that touches the way people and companies transact. Throughout the pandemic, payments digitization made huge strides forward, and merchants have the opportunity to keep that momentum by ensuring customers can use their preferred payment method in any given situation. 

The pressure is on for every corner of the payments ecosystem, and Web3 will be key in staying ahead of consumer preferences and technology trends.

Crypto and Payments

At Money2020 last year, ‘crypto’ was undoubtedly the most popular topic. And while mere months later the conversation evolved into a ‘crypto winter’ we’ve seen that volatility give way to stabilizing plateaus and a general realization that a spring thaw is on the way sooner than later. Payments companies need a plan to integrate the opportunities that Web3 creates, or they’ll risk getting left behind by competitors. Secure cryptocurrency transactions are the lowest hanging fruit, and a great starting point for the utility of digital currencies for even more use cases (like investments, among others).

By enabling crypto purchases and transactions, Payments companies will future-proof themselves for the Web3 evolution.

Over 2,300 US businesses already accept Bitcoin and other popular digital currencies, as reported by Deloitte, and the benefits are significant and wide-ranging:

  • Expand consumer audience: Up to 40% of customers who pay with crypto are new customers of the company. Crypto payers purchase amounts are on average double those of credit card users.
  • Keep your customers: Companies report that key clients and vendors are requesting crypto — payments companies need to be ready to receive and disburse digital assets.
  • Broaden capabilities: Digital assets and crypto create a path for more traditional treasury capabilities like real-time and secure money transfers or risk management.
  • Increase security: Cryptocurrency is considered more secure than credit and debit card payments — it doesn’t need third-party verification, their data isn’t stored in a centralized hub where data breaches commonly occur. Plus, the blockchain general ledger is used to verify and record every transaction, making it very difficult, if not impossible, to steal someone’s identity.
  • Unlock new asset classes: Cryptocurrency unlocks access to new capital and liquidity pools. New asset classes and the tokenization of traditional investments are key.
  • Drive internal innovation (and external perception): Introducing crypto into your Payments tech now can position your company as a leader in this emerging space, spark internal excitement about Web3, and future-proof your offering for the impending norm of digital currencies.

The role of crypto in Payments makes it the perfect starting point for your Web3 strategy. From there, the opportunity is expansive.

Evolving Point of Sale with Web3

A natural next focus when it comes to Web3 innovation for Payments is point of sale (POS). POS systems have undergone a significant digital transformation over the last decade, but the constraints of Web2 have meant that each new innovation requires a new layer of technology — and with it, more complexity.

POS systems by design thread multiple entities together — merchants, consumers, card networks, swiping devices, receipt software, and many more.  Yet the technology is set up in a way that creates more challenges for most sides of the equation. Some of the biggest pain points of centralized, non-distributed platforms can lead to outages, variable pricing, fees, and vendor lock-ins.

Rather than list the technological solutions to each of those individual pain points, let’s look holistically at what Web3 technology can enable to simplify and streamline the process. A point-of-sale system leveraging Fortress APIs can create an ‘all in one’ experience that begins with the scan of a QR code, enables set up (and funding) of a wallet, unlocks the ability to order and navigate either delivery or pickup, then track purchase and payment history — all without that customer needing to toggle across multiple experiences, or juggle physical items.

And that simplified experience outlined above doesn’t even tell you about what will happen behind the scenes — KYC, onboarding, and more in a connected experience. Which brings us to…

Simplifying Payments Technology

Payment providers building on Web2 have been brilliantly splicing together the many complicated layers that are required to receive and disburse money, but with Web3 infrastructure, there can be a better way — a simpler way that means better outcomes and less complexity (and risk) for your business. And with thousands and thousands of merchants clamoring for crypto capabilities, you will want to build your Web3 payments solutions to scale.

In addition to our tech that drives connective experiences like the one mentioned above, Fortress audits our partners’ onboarding processes to identify redundancies or offer revised solutions. 

With the right partner, Web3 infrastructure can reduce the layers of technology and condense the software you need. At Fortress, we built our technology and APIs to do everything our partners need on a foundational layer of regulation and compliance. Our wholly-owned subsidiary Fortress Trust is a chartered, regulated financial institution purpose-built to keep our partners compliant and safe as they navigate the Payments opportunities of Web3. 
The opportunities and capabilities unlocked by Web3 are as expansive as the Payments ecosystem itself. It can be overwhelming to determine where to start, and how best to scale into the future — that’s where we come in. Set a meeting to talk Web3 strategy at Money2020 by emailing Zack Fleischer today!

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