A World of Digital Payments
As more and more people work from and stay mostly in the confines of their own homes, cash payments have faced large declines and digital payments have faced truly explosive growth. Traditionally, many groups and individuals have been restricted from switching over to mostly digital payments by either digital exclusions, because the businesses or financial services in question did not offer them, or because of financial limitations.
Now, however, research from the Kansas City Fed suggests that the current pandemic is likely to have significant effects on promoting adoption of digital payments for all via the removal of these digital and financial barriers that have affected many. As we continue forward, the world grows ever more digital—digital payment access for everyone is a fundamental step in this process. This is not only the case for digital banking, but also for traditional retail, e-commerce, and transactions for applications. Further research from Bain & Company indicates significant growth in the digital payment industry and that current circumstances have altered their future projections for the percentage of transactions done entirely digitally by 2025 by a 10% increase.
Increased digital payment adoption has been pushed further by the necessarily physical nature of cash. Since physical notes are transferred and held by different individuals, with no clear record of where they’ve been or what they’ve touched, many countries are implementing specific policies for quarantining physical notes. The central bank of South Korea, the Bank of Korea has gone so far as to implement a quarantine of cash coming in. In the United States, the Federal Reserve has been quarantining USD for approximately seven to ten days prior to allowing recirculation. This is furthered by large organizations like the World Health Organization (WHO), who are encouraging the adoption of digital and contactless payments, since banknotes may hold the virus.
This significant growth in digital payments in conjunction with a reduction in traditional cash payments means that Blockchain technology will play a key role in the near future, since transactions performed on a blockchain are immutable, secure, and untraceable. Surveys done by the Economist Intelligence Unit suggest that the current virus conditions will accelerate digital currency adoption. Notable points from their research are that 85% of survey respondents have either owned, used or heard of decentralized digital currencies and that 20% of people stated that, although they do not currently use cryptocurrencies, they plan to within the next year. This was higher than for any other payment method studied, and indicates that cryptocurrency growth is overtaking that of other payment methods significantly.
As cryptocurrency spending grows more commonplace and digital-payments infrastructure improves, we will need two fundamental things to drive progress. First is easy access to spending and holding cryptocurrencies—the barrier for entry must be reduced and cryptocurrency spending should not seem like a chore. Second is implementation of chains that can actually manage the large number of transactions that traditional digital payment schemes can handle. Here at OPEN, we’re excited to highlight our OPEN Scaffold, a flexible on-chain infrastructure for applications to accept different crypto payments as well as our high TPS OPEN Chain, which can handle the large volume expected of digital payments tools with wide adoption. We don’t doubt that these tools will serve instrumental purposes in easing and accelerating adoption of decentralized digital payments.