For the third year in a row, Ripple is pleased to publish its annual Blockchain in Payments Report – a comprehensive insight into the fintech industry and the increasing role of blockchain in payments.
This year’s report revealed that not only is growth possible for blockchain and digital assets initiatives, but awareness and positive sentiment continue to increase.
In five global regions (North America, Europe, Middle East and Africa, Latin America and Asia-Pacific), familiarity with blockchain and cryptocurrency ranges between a whopping 82% and 94%. The positive mood continues to grow in both countries, with the cryptocurrency being more favored in the regions (62% -75%) than in the blockchain (52% -73%).
Regarding major takeaways, the Blockchain in Payments 2020 report proves three important things:
- Scaling blockchain payment solutions
- Digital assets are increasingly being considered to facilitate payments, especially in connection with blockchain technology
- Industry innovators are seeing significant growth even under COVID-19
Scalable blockchain payment solutions
There are positive signs that the flywheel of blockchain payment solutions is on the move around the world. Just over a third of respondents to the report are currently using blockchain technologies to send or receive payments for customers. Segmented by business type, digital banks are the leading sector, closely followed by retail banks, money transmitters and payment providers.
Many of these institutions have adopted blockchain technology to increase payment speed, achieve high levels of reliability, improve data transparency, and achieve long-term savings in operating costs. Blockchain solutions are scaled further as companies introduce new services for existing customer segments or expand existing services to new regions.
Case in point: cross-border payments. As blockchain payment solutions continue to solve many of the problems associated with cross-border payments, adoption has steadily increased. Indeed, real-time processing for cross-border payments is seen as a business necessity for many and is in demand by consumers and businesses.
Blockchain scales beyond payments. Two prominent areas are trade finance and capital markets. This shows that blockchain can be used company-wide.
It is clear that blockchain proofs of concepts are a thing of the past. Today, blockchain initiatives are jumping into production and rapidly moving down the adoption curve towards the late majority phase.
Increasing adoption of digital assets for domestic and cross-border payments
Overall, our report found that 67% believe that cryptocurrency is net reliable. The Latin American market in particular expressed strong feelings about reliability. While there are still concerns about cryptocurrency price volatility, transaction fees, lack of regulation, and inflexible / expensive liquidity arrangements, these adoption hurdles have not prevented growth. In fact, nearly four in five (79%) of companies reported growth in 2020, with 44% citing payment technology innovations as the top growth drivers.
The report consistently noted openness to more types of digital assets – with a mix of bitcoin, central bank digital currency, and stable coin. Speed for both domestic and cross-border payments remains a key strength, led by most markets. For those making cross-border payments using digital assets, financial inclusion, reduced cash usage, and availability of liquidity are strengths that are also relatively high, but are still below the sanitary transaction characteristics of speed and security that make blockchain so popular for domestic payments.
For digitally run companies, transparency, security and networking are the main advantages of introducing digital assets into payments. Those who are not digitally guided place more emphasis on hygiene factors related to speed.
Overall, payment service providers believe that their customers – businesses and consumers – see added value in using digital assets.
Continuing industry innovation amid a global pandemic
Despite the ongoing COVID-19 pandemic, which continues to cause economic difficulties, innovations in blockchain and digital assets continued to advance in 2020. As mentioned above, 79% of companies surveyed saw growth this year despite the impact of COVID. This was mainly due to the expansion of products, services and target customers, as well as innovations in payment technology, which were a major growth driver for 44% of companies.
The global pandemic has clearly resulted in payment service providers rethinking their business and operating models and adapting to the new digital-first world in order to survive. Survival involves maintaining liquidity. Blockchain technology is increasingly being used in emerging markets, and the availability of liquidity is one of the underlying reasons. Additionally, in a world of strict public health and social distancing policies, providers can leverage digital assets to deliver a now-necessary contactless experience.
There is now a general agreement between payment service providers that customers believe that value is created through the use of digital assets or blockchain technologies. With this perceived value proposition, it’s no wonder use cases are getting faster and faster.
You can download our full Blockchain in Payments 2020 report by clicking here.