Digital asset payments are no longer an abstract thought or future use case; they’re here and aren’t going away any time soon (you can now use Bitcoin to pay for a Big Mac in Switzerland).
Blockchain-based payments is just another payments system (like FedNow, SEPA and SWIFT) for payment services providers (PSPs) to integrate into. This will give them the ability to open their doors to new merchant segments, create new service offerings and expand into new geographic corridors.
The first enterprise adopters at scale have been PSPs and the question now is – how can they utilize blockchain-based payments to offer new services to keep up with what merchants will demand in the era of blockchain-based payments?
Introduce 24/7 merchant settlement with stablecoins
Stablecoins enable merchants to drastically shorten settlement lifecycles. By utilizing blockchain rails for settlement, PSPs can now reshape a process that takes 1-3 days (excluding weekends, nights, and holidays) into one that can happen almost instantly, any day, and at any time. Stablecoin settlement improves capital management, cost, and liquidity efficiencies for both PSPs and merchants.
PSPs like Checkout.com are already providing this capability for their crypto-native merchants who are comfortable holding and interacting with digital assets. However, there are broader opportunities to take stablecoin settlement a step further – including in areas like cross-border payments.
Appeal to a new generation of customers
Gen Z and Millenials are already digital and crypto native – they live most of their lives digitally and are comfortable using crypto and digital assets to pay for goods and services. According to a study by Checkout.com, 40% of 18-35 year olds plan to pay for goods and services with crypto this year.
From a geographic expansion perspective, many emerging markets have incredibly high crypto adoption rates given local currency and banking system access issues. By enabling merchants to engage with customers through digital asset-based forms of payment, PSPs can help merchants open doors to new geographic segments, leading to new revenue opportunities.
There is also an opportunity for PSPs themselves to cater to a new segment of merchants in the crypto native space. As crypto adoption continues to grow and more Web3 native companies launch, they will need access to such payments services and infrastructure to effectively scale and engage with customers or vendors.
Prepare merchants for what’s next
Every business will eventually need to have the ability to interact with digital assets. This might start with crypto-based payments, but there are other revenue opportunities for PSPs to pursue on behalf of their merchants.
One example of this is providing access to DeFi and staking services to help merchants earn more on their unencumbered capital or on behalf of their customers. For example, the Starbucks app currently holds over $1 billion of stored value – an amount that is larger than the balance sheet of ~85% of US banks.
Another example is creating NFT-based loyalty programs to help create new ways to engage with customers and increase customer lifetime value. Leading the charge in this area, Nike has made $185 million on NFTs so far, with more corporations exploring similar initiatives.
Learn more about what Checkout is doing within crypto and digital asset-based payments.