Research: Building Bridges Between Web2 and Web3 to Boost Mass Crypto Adoption
Checkout.com, the leading payment solutions provider, has released the Demystifying Crypto report highlighting an outlook for the adoption of crypto payments in 2022. The report provides by far comprehensive insight as it reveals the results of surveys of over 30,000 consumers and 3,000 fintech businesses around the globe. We have picked the key takeaways to understand the prospects of B2B and B2C crypto payment solutions.
The key idea is that the crypto space is maturing and integrating into everyday life at a breakneck pace. With consumers becoming more adaptive to use blockchain-based technologies, more businesses aim to satisfy consumers’ needs. Cryptocurrency exchanges have already occupied their niche in the financial services field. A peculiar example of it is Coinbase and other A-list names launching viral commercials during the Super Bowl. For the record, this promotional move boosted crypto apps downloads by almost 300%.
Building Bridges Between Web2 and Web3 Is the Hottest Trend
The report shows consumers are keen on adopting new payment technologies, so Checkout.com underlines the need for businesses to meet the demand in order to remain relevant and profitable. Specifically, the research of consumer sentiment around crypto over the past few years displayed a stunningly increasing desire of young people aged 18-35 to use cryptocurrencies as a means of payment for everyday goods and services. Four in ten of those surveyed said they'd be willing to pay in crypto in 2022. There were some who said they already had experience in these types of payments. In most cases, however, these experiences did not involve crypto-to-crypto transactions, but rather a payment processor that linked digital and fiat currencies.
Most people are still more inclined to trust centralized brands when it comes to digital payments. In connection with that, Checkout.com anticipates the businesses that can bridge between Web2 and Web3 will be able to offer consumers what they really need. Keeping pace with the trend, some PSP behemoths such as Visa and PayPal have already partnered with crypto wallets to process payments with the use of digital money. Apparently, it was the right decision that has already borne fruit because Visa reported on the crypto-cards linked payment volume hitting a record $2.5 billion in Q1 2022. In turn, most crypto wallets accept payments via Visa or Mastercard to deliver all the benefits of blockchain in the most convenient way. Some of such wallets are Wirex, Xapo, and NOW Wallet.
Stablecoins Are Taking Center Stage
Naturally, most consumers opt for familiar, long-lived and trusted names when deciding on which cryptocurrency to use. Bitcoin and Ethereum are still viewed as most popular for B2C payments. At the same time, Checkout.com noted increasing diversification of the crypto market. Citing Bitpay stats, the payment processor said Bitcoin transaction volumes shed 30% by the end of 2021, as consumers started using other digital money. Stablecoins USDC and USDT became two of the top five most preferred cryptocurrencies today.
Could Cryptocurrencies Ever Become a Mainstream Payment Method?
Answering the question in a few words: cryptocurrencies may become mainstream but not soon. The survey showed that opinions of 18-35 year-olds split between trust and distrust. Crypto can be used as currency in the opinion of 40% of the respondents, half of the surveyed displayed trust in merchants who support crypto, and another half expressed worries about all forms of crypto being too risky. So, the picture is somewhat confusing. The lack of trust is connected with the lack of knowledge about blockchain-based technologies. A third of the respondents believe cryptocurrencies are too complicated to become mainstream. About one third of the surveyed remained undecided answering many questions.
On the flip side, experienced crypto holders are more positive towards blockchain-supported payments. Specifically, 68% of respondents believe transactions with crypto are faster while 58% of crypto users think that blockchains make payments safer. Naturally, consumers’ promptness to use crypto payments encourages businesses to adopt new technologies. In particular, 23% of online businesses revealed plans to offer cryptocurrencies and stablecoins as a payment method by 2024, while 36% of CEOs expressed readiness to settle payments in stablecoins.
What Are the Implications of Crypto Payments for Businesses?
Some of the surveyed merchants and e-commerce companies are cautious to enable transactions with the digital currencies. Checkout.com laid down top 5 reasons why businesses are reluctant to accept crypto as a payment method:
lack of regulation
lack of knowledge about cryptocurrencies
lack of third-party support
doubts about high demand for such payments
Due to the taxation complications, most e-commerce companies prefer using third-party services rather than holding cryptocurrencies on their balance sheets. The greater tax complexity bothered 65% of businesses. Meanwhile, 75% of the surveyed that allow crypto payments facilitate transactions through third parties. The compliance aspect is also an issue here because payment processors need to be really careful about KYC and AML regulations.
At the same time, merchants willing to use crypto payment methods note a faster speed of transactions and smaller fees. Over 80% of finance chiefs said payments made in crypto were settled faster than non-crypto and 72% of the surveyed saw significantly lower costs.
In this regard we can conclude that e-commerce and fintech companies are likely to broaden their horizons and start introducing the use of blockchain-based payment methods more actively. However, they will probably need the help of third parties to soften the impact of regulation and taxation complications. In fact, many cryptocurrency processing platforms provide businesses with payment gateways that are fast, low-cost, and flexible. A good example of such a platform is ChangeNOW.
Gig Workers and Creators Pinning High Hopes on DeFi Payment Solutions
Another key aspect the report sheds light on is the digital economy represented by gig workers, creators, gamers, and artists – all of them seeking to make their living through independent online activity. This sphere is expanding and diversifying partially thanks to crypto. With the current size of $104 billion, the gig economy is expected to four-fold to $455 billion by 2023.
The participants of the gig economy are early adopters of crypto payments and by now have acquired an acute interest in spending and being paid digital money. They have high hopes for the autonomy that DeFi can provide. Almost half of the creatives surveyed revealed plans to accept crypto regularly while 44% agree to being paid crypto occasionally. At the same time, 46% of streamers and gamers said their audience sent them cryptocurrencies as donations. Amid that, the demand for payout solutions is bound to be buoyant. With many offers out there, users opt for those that provide them with diversity, security, and competitive costs.
So far, crypto assets have been widely considered an investment tool. But there is a tendency of common acceptance of digital money as a means of payment. As the world develops and changes rapidly, new professions emerge, new fields are explored, new boundaries are challenged. The digital economy is expanding at a space-rocket pace. Unquestionably, payment technologies should pace up with such developments. In this regard, cryptocurrencies may serve to improve productivity, innovation, and competitiveness.
It would be wrong to say that the DeFi realm is in its nascent stage. The survey of Checkout.com proves that more and more businesses and individuals are putting trust in crypto payments. Some areas such as the gig economy are likely to become completely dominated by blockchain-based financial relations soon.
Still, crypto payments have its traps and pitfalls. Specifically, regulatory issues remain a sticking point with many businesses seeking to avoid tax and compliance complications. Further on, the lack of knowledge about how blockchain works results in a lack of trust in this technology, so many consumers still prefer to use the services of recognized financial brands. The possible answer to the equilibrium between avid interest and skepticism towards crypto is connecting Web2 and Web3, so the companies that build bridges between these technologies can get far.
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