businesses will use digital assets for purchases | PYMNTS.com

As businesses were pushed to make payments in new ways due to the events of 2020, they took a closer look at how emerging payment methods could deliver the speed and convenience they were looking for.

As a result, interest is increasing on how cryptocurrencies could deliver such benefits around the world and how supporting technologies, such as blockchain, can play a role in meeting payment needs.

In fact, 40% of businesses in the Americas, Africa and the Middle East plan to use digital assets to make purchases in the next year, according to The Cryptocurrency Payments Opportunity, a PYMNTS and i2c Inc collaboration.

“Consumer and business perceptions of cryptocurrencies have evolved dramatically over the past decade, from insider discussions to a topic taken more seriously and followed by financial companies and the media to to where we are today, which are real discussions around tables, companies and boards, ”Jim McCarthy, president of i2c, told PYMNTS.

More and more companies perceive crypto as a bargaining chip

The overall perception of cryptocurrencies among businesses appears to be shifting from an asset class to that of usable currency, although virtual currencies are still years away from establishing themselves as part of the mainstream payments ecosystem. .

For example, an August 2021 PYMNTS report found that multinational companies are six times more likely to use the cryptocurrencies they hold for transactions rather than holding them as assets, and 50% of companies surveyed have indicated that they are already using or planning to use digital assets. for cross-border payments.

He also revealed that most financial institutions (FIs) anticipate an increase in cryptocurrency payments soon, with 93% of banks agreeing that their business customers will use digital currencies for investments and transactions.

While virtual currencies are not yet mainstream, businesses, FinTechs, and FIs are all taking swift steps to move towards this reality, and many are building the key digital infrastructure needed to facilitate smooth payments. In fact, 10% of FIs currently support at least one form of cryptocurrency.

Businesses See Potential Applications for B2B Payments

This move creates increased competition between traditional financial institutions and the more agile FinTechs seeking to play a dominant role in the space, especially as the potential applications of cryptocurrencies for B2B payments are gaining increasing attention. more companies.

It is therefore imperative for FIs to enable a smooth conversion to cryptocurrencies for payments, especially as banks and businesses prepare for a future in which digital assets are generally accepted for cases of B2B use.

This also includes the space for cross-border B2B payments, as the use of cryptocurrencies and the blockchain technologies that support them for cross-border payments could provide companies with key benefits in the coming years as business continues to grow. will go global.

Cross-border payments are the big use case

“This is the great use case,” McCarthy said. “If you needed to move money around the world, you quickly realized it wasn’t easy. And so, cryptocurrencies have several cross-border advantages for businesses – and, I would say, consumers – with international interests. [in terms of] money transmission.

He added that crypto moves more easily across borders, does not need to go through a myriad of correspondent banks to transfer value, and removes much of the opacity that comes with transferring money through. traditional methods.

As a result, financial entities are now under pressure to create transparent cryptocurrency payment tools. However, they face several challenges in doing so. There is still a lack of global standards for payments through digital currencies, and many companies still have lingering questions about the security of digital assets.

Innovation and growing pains are both expected

It is essential that businesses, banks and issuers examine the future role of cryptocurrencies in the B2B and mainstream space, as well as the role of technologies such as blockchain.

McCarthy said i2c is experiencing tremendous innovation, growth and potential over the next few years, tempered by the expectation that as crypto becomes more mainstream it will bring increasing difficulties in the form of regulation, compliance and oversight by central banks and regulators.

“All of that extra circumspection will likely result in things that aren’t all good, but things that probably aren’t all bad either,” McCarthy said. “A more level playing field in terms of consumer and business protection and more effective integration of people into the formal digital economy are not bad things. “

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On: Forty-seven percent of U.S. consumers avoid digital-only banks due to data security concerns, despite considerable interest in these services. In Digital Banking: The Brewing Battle For Where We Will Bank, PYMNTS surveyed over 2,200 consumers to reveal how digital-only banks can boost privacy and security while providing convenient services to meet this unmet demand.

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