Digital currencies are gaining attention for their potential uses. These include international payments and money transfers, loyalty programs, and digital wallet integration.
Digital currency has the potential to offer increased efficiency, lower transaction costs, improved privacy, and greater access to financial services. It could also provide a platform for businesses to offer new services to customers. Furthermore, digital currency could potentially provide a secure and cost-effective way for people in developing countries to access global markets.
Digital currencies are being explored for many applications. They can increase access to financial services and remittances. They can also provide a more secure and efficient way to transact.
Use cases for digital currency such as central bank digital currencies (CBDCs) and stablecoins have seen a rise in recent years. CBDCs have the potential to provide more efficient payment systems. The Reserve Bank of Australia is researching CBDC as a complement to existing forms of money. Stablecoins (whose value is tied to that of another currency) are secure and cost-effective ways to store and transfer funds.
Digital currencies provide opportunities to develop new business models, such as tokenisation of assets. New technologies, such as blockchain and distributed ledger technology, continue to evolve. These technologies have the potential to disrupt existing payment systems. They can open up new markets and opportunities for businesses and consumers alike.
Digital currencies are gaining popularity for international payments. This is because they are speedy and have no central governing body. They provide a cost-effective and efficient way to transfer money between countries with minimal friction and greater transparency.
The demand for affordable, frictionless cross-border payments has grown, but transactions are complex compared with domestic payment services. Alternative methods of modernising cross-border payment services are being explored, with central banks issuing their own digital currency. Digital currencies issued by a central bank (CBDCs), include features tailored to facilitate cross-border payments.
There’s currently no single international platform for cross-border payments and settlements. Central banks of several countries, including Australia, Malaysia, Singapore and South Africa are working with the Bank for International Settlements (BIS) Innovation Hub on a multi-CBDC platform for international settlements. Their goal is to cut costs and increase the speed of cross-border transactions using digital currencies issued by multiple central banks.
In Australia, the New Payments Platform (NPP) will play a part in receiving inbound international payments.
The growth of CBDCs is making cross-border remittances faster, cheaper and more secure. With global B2B cross-border remittances currently worth around $150 trillion, the potential for savings is huge.
Digital currencies are helping cross-border trade in a growing number of sectors. Agrotoken is the first global tokenisation platform for agro-commodities. Grain is converted into digital tokens for users to buy supplies, vehicles, machinery and even farms.
Businesses can also offer crypto currencies in their reward programs. A number of well-known brands are already rewarding customers with cryptocurrency. Consumers can view and transact with assets, including cryptocurrencies, loyalty and rewards points, airline miles and gift cards.
However, the fluctuating prices of cryptocurrencies can create uncertainty for consumers. According to a recent survey, 42% of respondents said redemption value was their number one concern when accepting crypto rewards.
A crypto wallet is a digital file that allows consumers to store and access all their payment methods in one place. It makes checking things like credit card accounts, stocks and cryptocurrencies simple.
The use of crypto wallets is far from mainstream. Currently, most consumers prefer to use well-established digital wallets such as PayPal, Google Pay and Apple Pay. Only about 6% of consumers prefer crypto-specific digital wallets.
Time will tell
Due to its market volatility and scrutiny by regulators, investors and consumers, cryptocurrency has a long way to go before it becomes a mainstream payment experience. Trust in digital currency systems will have to be restored before widespread adoption will occur.
As digital currency continues to evolve, it’s important to keep an open mind and take a long-term approach to its potential. Digital currency could be the future of payments, but only time will tell.
In the meantime, Eway will continue to stay abreast of new technologies and make these available for fast integration when they land. Want to learn how we can simplify ecommerce for your customers and boost your business profits? Contact us today!
This article is based on the Global Payments 2023 Commerce and Payment Trends Report. Eway is a Global Payments company.
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