How is Web3 Revolutionising The Future Of Payments?

Posted on 8 January 202312 January 2023

Changes in consumer behaviour are intimidating and unsettling for many, whether they are selling to businesses or individuals. Although this worry is natural, providers should view it as a warning sign that they need to change and match new customer expectations in order to keep up. In order to adapt to changing customer needs, businesses must also reconsider the purchasing options available to them.

Some forward-thinking businesses that recognize the need for change see the current situation as an opportunity to review the payment options they offer clients in order to give more options to those trying to rein in their expenditure. Indeed, by providing extra payment methods, they can keep consumers whose old invoicing options are no longer viable and prevent customer loss.

In their quest to give their customers safer, wiser, and easier payment options, businesses are finding Web3 payments to be a feasible option. For instance, in recent years, Visa and Mastercard have been aggressively investigating Web3 payments technologies. Both of the major Fintech companies declared their collaboration with crypto wallets. In April 2022, Mastercard also introduced its first credit card backed by cryptocurrency.

Can Web3 payments, however, truly change the online payment landscape?

Let’s take a brief look at web3 to help us comprehend this.

What is Web3?

First, however, what exactly is Web3?

In a nutshell, Web3 is a collection of ideas for reforming the internet in an effort to make it more inclusive and democratic. It uses blockchain as a reliable means to run the internet in an effort to counteract the dominance of a small number of very large technological businesses and their infrastructure.

All information and data would be kept in a decentralised location, and the decentralised network rather than private businesses would verify all operations. There would be no need to use a middleman to send money or information.

The modern web3 payment solution — How it is revolutionizing the payment space

Recently, there have been more options for billing and payment, which some people have swiftly embraced. Usage-based pricing, or UBP, is one of the most significant new business models that businesses are using. UBP enables end customers to pay only for the services they really use. It’s encouraging to see businesses actively creating various billing structures to address shifting consumer demands. Even while this choice appears straightforward, putting up the processes is a separate and more challenging issue.

Companies must be able to gather various incoming data on user usage and subscriptions, apply it to contractual rate agreements, and swiftly construct a single bill precisely when they can no longer generate the same invoice for every customer. It can be difficult for firms that have never used numerous billing choices to develop new processes, which, if done incorrectly, can result in improper billing. This affects the customer’s time and, as a result, the company’s reputation.

Why is Web3 the future of payments?

In keeping with the concepts of privacy and democratisation, Web3 payments allow money to be exchanged without the need for centralised intermediate businesses. It is simple, quick, and anonymous to send money. Peer-to-peer technology makes the transaction possible, eliminating the need for a middleman and the infrastructure of major technological corporations.

Web3 will reduce the red tape involved in money and finance. People won’t need to register for financial services or grant permission for businesses to access their personal and financial information in order to send money. Online shoppers may be confident that their personal information is secure and their transaction details cannot be viewed because Web3 data is encrypted.

The availability of more currencies for trading and holding through Web3 payments may increase people’s access to a wider range of financial options than just fiat money. Access to the financial system and the ability to pay with crypto or other currencies will be made easier and more accessible to all people. Web3 payments are processed significantly faster as a result of the absence of bureaucracy. Unlike regular Web2 payments, which may take days to settle, blockchain payments settle in a matter of minutes or even seconds. A Web3 payment system also makes international transfers more simpler by doing away with the requirement for difficult currency translations and high remittance fees.

Features of Web 3 Payments

Due to their lengthy settlement timeframes and high transaction costs, payment systems can be challenging. As an improvement over the flawed fiat payment system, the Web 3 payment system has changed the entire payment system with speedier transactions, more security, censorship resistance, and suitable rewards.

Infrastructure for the Web 3 payment mechanism is unreliable. Without a middleman, it enables users to speak to one another secretly or publicly. Smart contracts that self-execute allow for the completion of transactions and agreements.

Interoperability is a key component of web 3 payment systems. It enables connections between various platforms and apps and their transition to web 3 architecture. One of the main factors propelling the adoption of web 3 is interoperability.

How to make payments in web3?

Wallets and Web3 SDK for making payments through dApps

Web3 wallets are digital wallets that let you engage with dApps on several blockchains and store digital assets including fungible and non-fungible (NFTs) tokens.

The Web3 wallets are available for various blockchains as:
Browser wallets
Browser Extension
Mobile wallets (Android and iOS dApps)

Users can register for accounts in web3 wallets to hold digital assets. An account for a web3 wallet comes with a set of private and public keys. To send/transfer tokens or other assets, one has to have access to the account’s public key, which serves as its address. It is not open to being disclosed to others. The connected wallet’s private key can be used as a password to carry out any transaction. It’s a code that shouldn’t be revealed to anyone else in order to prevent security breaches. Existing accounts can be imported into a web3 wallet using this private key. Users can create and manage multiple accounts in any web3 wallet. The most common sort of web3 wallet used with web dApps is the browser extension.

Users can make web3 payments on a variety of platforms, including Ethereum, Paypal, and OpenSea.

Examples of Web 3 Payment system

1. Ethereum

One of the well-known decentralised, open-source blockchain networks is Ethereum. It enables users to exchange, borrow, and lend digital assets without the need for a middleman. Not just ether tokens, but all digital assets are accepted on this platform. Peer-to-peer, permissionless, and non-hierarchical transactions are the norm. One of the most recent advancements in payment systems is the capability to process payments using NFTs.

2. PayPal

It’s obvious that several web 3 advances have been driven by web 2 technology. An illustration of this is PayPal, whose ongoing research led to the development of its own cryptocurrency token and blockchain business models. Users of PayPal can move digital assets between their PayPal accounts and other exchanges and wallets.

3. OpenSea

One of the biggest NFT markets is OpenSea. By linking their wallets to the marketplace, it enables users to conduct transactions.

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