In our recent panel discussion leading voices from Worldpay, Circle, Ripple, and Stellar Development Foundation came together to discuss the transformative impact of cryptocurrencies and blockchain technology on the payments landscape.

This blog explores the key insights shared by Eric Van Miltenburg, SVP, Strategic Initiatives at Ripple, Coralie Billmann, VP, Europe at Circle, Nabil Manji, SVP, Crypto at Worldpay, and Jason Chlipala, Chief Business Officer at Stellar Development Foundation. Dissecting how these innovations are reshaping merchant experiences and consumer interactions in the financial sector – the highlights include:

• Benefits for merchants: cryptocurrencies offer merchants faster settlement speeds and potential fraud and risk management improvements, particularly in regulatory environments like Europe's online sports betting platforms.
• Cost reduction and compliance: cryptocurrencies, especially stablecoins, can dramatically reduce transaction costs, particularly in cross-border payments. Despite stringent compliance demands, these digital currencies are often seen as more secure than traditional banking systems.
• Integration vs. replacement: cryptocurrencies should not replace but rather integrate with existing financial systems. This balanced approach leverages blockchain strengths to enhance current systems without displacing them.
• Collaboration with traditional financial systems: companies like Ripple aim to work alongside regulators and traditional financial institutions to improve efficiencies, especially in cross-border transactions, without disrupting established financial structures.
• Real-time settlements with stablecoins: introducing stablecoin settlements could overcome the inefficiencies of traditional banking systems that delay fund transfers, enhancing capital efficiency for merchants.
• Challenges and opportunities of immediate settlements: achieving immediate settlement in crypto payments faces hurdles such as consumer adoption and the costs associated with advancing funds before traditional processing.
• The role of stablecoins in simplifying payment systems: stablecoins could facilitate smoother transactions within dedicated ecosystems, reducing reliance on fiat conversions and enhancing the flow of money.
• Enhancing payment infrastructure: Ripple's use of XRP as a bridge currency is intended to improve the speed and cost of cross-border transactions, indicating a shift towards more efficient financial communication systems.
• Stablecoin mainstream adoption: the transition of stablecoins into everyday transactions could mirror the simplicity of existing payment apps, promoting their broader acceptance across various sectors.
• Optimizing B2B and cross-border payments: blockchain technology offers significant benefits for midsize businesses in managing cash flow and reducing transaction costs, particularly in international settings.
• Strategic use of cryptocurrencies in global payments: The strategic deployment of cryptocurrencies can significantly benefit low-value, high-frequency transactions, particularly in regions like APAC and LATAM.
• Impact of speed and cost efficiency: blockchain's promise of speed and low cost per transaction highlights its potential to overhaul traditional payment systems, though challenges remain in scaling these benefits for widespread financial use.

Embracing cryptocurrency for the merchants’ benefit

Nabil emphasized the immediate benefits that cryptocurrencies bring to merchants, particularly in terms of settlement speed.

“Typically what merchants care about is speed of settlement cost and then fraud and risk.”

He highlighted that transactions involving direct wallet-to-wallet transfers allow merchants to receive payments almost instantaneously — a significant advantage over traditional methods.

However, Nabil also pointed out the challenges in fraud and risk management within crypto payments, stressing the need for improvements in how merchants verify the ownership of payment methods in regulatory environments, such as Europe’s online sports betting platforms.

“Fraud and risk management, I think is an area where there's still some solving to do on the crypto side. Depending on the type of business you operate, for example, you might need to know a source of funds or source of wealth.”

Reducing costs and enhancing compliance

Coralie discussed how cryptocurrencies, especially stablecoins, reduce transaction costs dramatically, particularly in cross-border payments.

"Using crypto is definitely reducing this cost move to zero.”

She also touched on the stringent compliance and regulatory demands faced by crypto businesses, which in many instances surpass those in the traditional banking sector. This adherence to regulation not only ensures security but also builds trust among users and regulators. She explained:

“We see the market to be even sometimes more safe and secure than the banking side, because again, the requirements are so huge.”

Realistic integration over replacement

Jason argued for a balanced view of cryptocurrency’s role in the financial ecosystem. He advocated for integration rather than replacement of existing financial systems.

“This view of crypto and blockchain – that it is pareto better than every other payment method, and that's just not true. Credit cards are not going anywhere. They're going to continue to exist. Cash is going to continue to exist…blockchain and stablecoins in particular represent another payment method. In some places, it's better and in other places, it's not.”

This perspective respects the coexistence of traditional and modern payment methods, leveraging blockchain’s strengths to enhance rather than displace existing systems.

Collaborative evolution with traditional financial institutions

Eric highlighted Ripple's approach to blockchain technology as collaborative rather than disruptive of the current financial system. He explained:

“We want to work with regulators, we want to work with central banks, we want to work with companies and help make processes better as opposed to sort of destroy what's there.”

This strategy focuses on improving efficiencies in the financial system, especially in cross-border transactions, without overturning established financial structures and focusing on compliance.

“It's about finding those intersections where we can actually be additive and move it in a positive direction in a compliant way. Without compliance, the real volume of the real money is not going to come into the system.”

Payment efficiency with stablecoins: A shift towards real-time settlements

Nabil illustrated a common scenario for merchants where traditional banking systems delay the settlement of funds from card payments, which can range from one to five days. This delay is further exacerbated over weekends and bank holidays due to the operational hours of traditional bank clearing systems.

"Today if you're a merchant, say you run a coffee shop and you accept card payments, depending on where you are in the world, you'll receive the money from that purchase in your bank account anywhere from one to five days later."

To combat these inefficiencies, Worldpay has introduced an option for merchants to receive settlements in stablecoins. This approach leverages the non-stop operational nature of blockchain technology, which runs 24/7, 365 days a year. Nabil discussed the potential for future improvements, "but we are looking into ways how you could do something like a same-day settlement or settlement over the weekend using stablecoin?.”

The integration of stablecoins not only promises to accelerate the pace at which merchants receive payments but also enhances their capital efficiency. In today's economic environment, where interest rates are significantly higher, the timely receipt of funds has become more crucial than ever. Nabil emphasized the practical benefits, stating:

"In today's world, especially with rates being as high as they are, everybody wants money sooner. Everybody's very focused on working capital and capital efficiency."

The challenges and opportunities of immediate settlement in crypto payments

The mechanics of immediate settlement

Nabil detailed the current limitations within traditional payment systems, highlighting the involvement of multiple intermediaries that slow down the settlement process.

"There's a number of intermediaries involved, and that number can vary from two or three all the way up to five or six."

This complexity is a significant barrier to achieving same-day settlements for merchants, as existing systems like Visa and Mastercard typically process transactions with a delay.

Financial implications of faster settlements

Discussing the financial strain of advancing settlements, Nabil pointed out the substantial costs associated with fronting capital to cover transactions before they are processed by traditional payment networks.

"Visa and Mastercard don't send it to us until one, two, three days later," Nabil stated, emphasizing the economic impracticality of covering these gaps without incurring high costs.

Consumer adoption of cryptocurrencies

The conversation also touched on the need for wider consumer adoption of cryptocurrencies to fully realize the benefits of immediate settlements. Antoine raised the point about the necessity for payers to use stablecoins directly to significantly reduce settlement times. However, Nabil noted that changing consumer payment habits presents a considerable challenge. He candidly shared:

"I don't care when the cafe gets its money when I buy my coffee, what does it matter to me if they get their money five days later? I don't care."

Overcoming barriers to adoption

Nabil suggested that for cryptocurrencies to become more widely accepted, there needs to be a clear benefit to the consumer — not just the merchants. He explained:

"What's the benefit to the consumer of paying in a stablecoin? Someone needs to figure out how to make that attractive for the consumer."

This statement underscores a fundamental hurdle, aligning the advantages of cryptocurrencies with consumer incentives and preferences.

Simplifying payment systems: The role of stablecoins and digital assets

Coralie articulated a vision for payment systems that operate seamlessly in the background, much like internet protocols do today.

"We want payments or money flow to be the same – smooth. We don't care about the back of the backend."

This analogy to the internet, where complex processes occur out of sight and without user intervention, captures the essence of what the financial technology sector aims to achieve with digital currencies.

Coralie further discussed how stablecoins could facilitate this seamless flow of money, especially within a dedicated ecosystem. By minimizing the need to revert to fiat currencies, stablecoins can offer a smoother transaction process.

“A solution for this is to have a stablecoin stay in this ecosystem. So merchants and buyers staying and not converting back to fiat.”

Explaining how transactions within a closed loop of stablecoin users can avoid the delays and fees associated with traditional banking infrastructures.

Ripple's approach to enhancing payment infrastructure

Eric shared insights on how Ripple has been improving cross-border payment systems by addressing the inefficiencies of traditional banking networks.

"We created a better messaging system that allowed cross-border messaging to happen much more quickly…We focused on XRP as this bridge currency."

Highlighting the integration of XRP as a bridge currency to facilitate quicker movements of capital alongside the communication of payment instructions.

The stablecoin path to mainstream adoption

Coralie envisioned the "stablecoin moment" as a time when "the population of the retail clients are using stablecoin in our day today." This concept emphasizes the transition of stablecoins from niche financial markets to everyday transactions, highlighting their growing integration across various sectors.

Coralie shares that Circle has started partnerships with Manchester United and Nubank in Brazil, as evidence of this shift. She describes these collaborations as pivotal in making stablecoin use as commonplace and seamless as current fiat currencies, stating, "I think it will be whenever we don't care about how we pay, that can be the stablecoin moment."

These remarks underscore the movement towards a future where stablecoins are embedded within the global economy, facilitating transactions with ease and ubiquity, mirroring the simplicity of existing payment apps like Venmo or Cash App.

Optimizing B2B and cross-border payments

Jason highlighted the varying impact of blockchain technology across different market segments. Jason explained:

"Access to dollars remains one of the biggest use cases right now of blockchain assets like USDC and Tether."

Emphasizing the geographical rather than sector-specific adoption of blockchain for financial transactions.

He noted the particular challenges faced by midsize businesses, which find traditional payment systems either too slow or expensive, and are poorly served by both large financial institutions and classic remittance companies.

Jason pointed out that companies such as Arf, which operates on the Stellar network and serves as a liquidity provider for money transmitters, exemplify the benefits of blockchain in these scenarios. He stated:

"They lend money to these money transmitters and they use the USDC asset, and it works really well for them.”

Highlighting the critical advantages of improved settlement speed and reduced costs. This insight suggests that mid-market companies stand to gain significantly from blockchain adoption, primarily due to enhanced efficiency in managing cash flow and transaction costs.

Strategic use of cryptocurrencies in global payments (spotlight on APAC and LATAM)

Eric highlighted the Asia Pacific (APAC) and Latin American (LATAM) regions as significant growth areas, where Ripple has seen a "5x growth in volume" of their product that leverages XRP for liquidity. He noted, "I do think the broader APAC region is definitely a hotspot for us," emphasizing the strategic investment Ripple has made in these regions due to their high responsiveness to blockchain solutions.

Conversely, Nabil expanded the discussion to the types of payments that benefit most from cryptocurrencies, particularly in scenarios involving low-value, high-frequency transactions across borders. He explained:

"Let's say I’m Twitter or TikTok, paying out all my commissions or royalties to hundreds of thousands of influencers on my platform on a daily basis, and those payments are $20 or $100 a day. Then that cost of transacting becomes extremely high."

He further detailed how stablecoins like USDC offer a cost-effective alternative, especially for international payouts where traditional banking fees and FX rates would otherwise erode the value of small, frequent transactions. Both Eric and Nabil agree that the utility of digital currencies extends beyond regional applications to specific, strategic use cases, highlighting the adaptability and potential of cryptocurrencies in transforming global payment systems.

The impact of speed and cost efficiency

Jason discussed their strategic choice to develop their own blockchain solutions rather than relying on existing Layer 2 technologies or Ethereum Virtual Machine (EVM), explaining:

"Our view is that Ethereum and the L2 structure is kicking the can down the road a little bit...The L2’s don't really fix the underlying technical issues. So we chose to build our own thing.”

This decision highlights a deliberate approach to addressing inherent blockchain inefficiencies that many systems do not fully resolve.

Nabil and Eric contributed perspectives on the economic aspects of blockchain transactions. Nabil pointed out that while domestic payment costs are relatively low, the real expense in cross-border payments lies in the FX spread, emphasizing:

"It's typically not the per transaction click fee that's expensive, it's the FX spread."

Eric agreed on the value of speed and cost reductions, noting:

"XRP ledger settles in seconds. It's 110 thousandth of a cent per transaction fee."

Both contributions underline the potential for blockchain to streamline payment systems, though they acknowledge that significant hurdles remain in fully leveraging these technologies for mainstream financial processes.

Paving the way for a modernized financial ecosystem

In conclusion, the panel discussion with leaders from Worldpay, Circle, Ripple, and Stellar Development Foundation highlighted the profound impact that cryptocurrencies and blockchain technology are poised to have on the payments industry.

As these technologies continue to evolve, they offer promising solutions for enhancing transaction speeds, reducing costs, and improving compliance, all while working symbiotically with existing financial systems. By fostering a collaborative approach with traditional financial institutions and emphasizing regulatory compliance, the adoption of cryptocurrencies —particularly stablecoins — could reshape not just merchant experiences but also offer substantive benefits to consumers, bridging the gap towards widespread acceptance and use in everyday transactions.

To watch the full panel discussion visit the Cryptio YouTube channel.