An overwhelming majority of leaders surveyed (97%) believe that blockchain technology and cryptocurrency will play a significant or very significant role in facilitating faster payments within the next three years. The potential of blockchain and crypto technology to revolutionize cross-border payments is especially promising, as noted by Juniper Research, which predicts that financial institutions conducting cross-border transactions could save an estimated $10 billion by 2030 through fast, reliable, and transparent payments settlement. It’s worth noting that global cross-border payment flows are expected to grow at a compound annual rate of 5%, reaching $156 trillion.
Furthermore, survey respondents believe that there are other potential uses for crypto-enabled payments. More than half of the surveyed leaders predict that most merchants will accept crypto payments within one to three years, and Middle Eastern and African leaders are particularly optimistic, with 27% believing that this threshold will be crossed within the next year. This optimism in these regions may stem from a desire for greater financial access and inclusion, as evidenced by the growing popularity of other crypto-enabled payment solutions like mobile payments and Central Bank Digital Currencies (CBDCs).
The pandemic has increased the urgency for a shift towards crypto payments. Due to various physical limitations and financial insecurities, there has been an accelerated interest in crypto-enabled and cost-effective payment options.
According to a survey, over 50% of respondents believe that crypto’s primary benefit is lower payments cost, both domestically and internationally. Nearly 90% of the surveyed leaders acknowledged some “cost-improvements related to international payments,” and 75% expect domestic cost benefits.
Domestic payment providers see crypto as a solution to transaction and processing fees, which can be as high as 4% according to the US Chamber of Commerce. While these providers cite lower costs of cross-border payments as the primary value proposition of crypto, only about half of them currently offer cross-border payment services. One reason could be that the high costs and inefficiencies of traditional cross-border payments are inhibiting these businesses from expanding into new markets.
Research conducted by Ripple (New Value Research, August 2021) further supports the sentiment around the lower cost benefit. Roughly 30% of financial institutions and 40% of enterprise respondents cited lower costs for both businesses and consumers as one of the advantages of cryptocurrency.
While lower transaction costs can boost corporate margins, those who pass on the savings to end-users may have better customer acquisition and retention rates. Currently, the global average cost of a remittance remains a high 6%, which is double the Sustainable Development Goal targeted by the United Nations.
A Deloitte study of senior retail executives finds that merchants widely agree that accepting digital currencies offers a competitive advantage (87%), but more than 50% agreed that regulations must be enacted,
The majority of payment providers are considering using cryptocurrencies, but only 17% currently support crypto-enabled payments due to regulatory clarity being a primary hurdle. Nearly one-third of participants cited regulatory clarity exclusively as the barrier to using blockchain for payments. Additionally, nearly 90% of respondents who cited additional adoption barriers pointed to regulatory ambiguity as the main deterrent.
A Deloitte study found that more than 50% of retail executives agreed that regulations must be enacted for digital currencies to be accepted. However, the industry is trending positively as the US government released a first-of-its-kind framework for crypto regulation. Respondents also cited mild concerns around technical investment, but this may wane as technology service providers introduce more user-friendly solutions.
The majority of payment providers acknowledge the benefits of blockchain and cryptocurrency in payments, with no respondents expressing uncertainty about their advantages. As payments providers aim to ensure speed, security, transparency, and flexibility in their payment strategies, emerging solutions that provide these features are likely to be adopted. This report aims to provide an overview of the current state of crypto usage, the sentiment around the acceptance and adoption of crypto-enabled payments, and the potential transaction-related improvements that crypto introduces. While crypto may offer a solution to the outdated and often exclusive payment markets, there are concerns that must be addressed. Forward-thinking payment leaders are expected to take the lead in exploring and implementing crypto solutions.