[Insight] Facebook, Paypal, And Even Walmart… What Is the Current Status of the Digital Asset Payment?
The use-case of blockchain is one of the fields that is receiving much attention. Just like the price of digital assets, including Bitcoin. Though the concept of the issuance and the price rise of digital assets has been established long beforehand, many are still questioning the utilization of blockchain in real life. The reason why people are saying that digital assets and blockchain are ‘intangible’ is also originating from this particular issue. That is because there is no actual use-case to be found in this business. However, unlike in the past, people are saying that the recent digital asset boom is indeed a tangible one. And the payment field is at the forefront of this phenomenon.
Libra, Facebook’s Ambitions Payment Project, is Returning This Year with the new name: Diem
The first project that drew people’s attention to the digital asset payment field was the Libra project led by Facebook. In June 2019, Libra unveiled its white book for the first time, aiming to create a service for financially-neglected people who cannot enjoy the bank’s infrastructure. Back then, Libra was planning for a stable coin made of a legal tender basket so that it can be used worldwide. This includes not only USD but also other major legal tenders all around the world, including EUR. At this ambitious plan, the world paid their attention to Facebook’s digital asset project and there were some expectations that the digital assets can be used in the world-wide payment market.
However, the U.S. regulation authority declared that the development of Libra must be stopped until it is proved that Libra is not a threat to the financial safety. The major companies and organizations that were participating in the Libra alliance have withdrawn due to the risks of regulation. Libra had no other choice but to alter their initial course. Thus Libra 2.0 came to this world in April 2020. The key point of this revised version was to release a stable coin based on a single legal tender, not multiple currencies. Plus, they have changed their project name to Diem.
Though Diem didn’t mention their release date, the business officials are expecting that it will be released this year. The initial plan was aiming for the release in 2021 since it was Libra. Also, it has revised the project to a more regulation-friendly way. If Diem is released, it will be a major watershed for the digital asset market since Diem is running its service with backups from a giant platform called Facebook.
Paypal, Leader of the Bitcoin Bull Market, Even Wall Street is Recommending Their Stock
Though Diem was the first project that introduced the concept of digital asset payment, it was Paypal’s project that has actually ignited the fire. In October 2020, Paypal announced that they are providing trading service and payment service for digital assets. According to Reuters, Paypal declared in its announcement that “Customers can trade or keep Bitcoin or other digital assets through Paypal’s online wallet,” and added, “From the beginning of 2021, it will be possible to shop with digital assets from 26 million markets within Paypal network.”
Reuters commented, “There are many major Fintech companies such as Square, a mobile payment firm, and Robinhood, a stock trading app, are providing digital asset trading services, but considering the scale of the company, Paypal’s advance to the digital asset field is much more meaningful.” Since digital assets are versatile, they are not so charming for the normal consumers who are not investors. Also, slow transactions and costly ways compared to the existing payment systems are their weak point. To solve this, Paypal is planning to pay in legal tenders such as USD if the customers are making their payment with digital assets. This means that the merchants are not receiving digital assets as a price for their products and services.
Wall Street is showing a hospitable reaction towards Paypal’s recent moves and recommending to buy their stocks. Within this context, Dan Dolev, an analyst in Wall Street, also said, “More than a half of Paypal’s digital asset users are using Paypal’s app every day.” He forecasted, “Until 2023, Paypal will create almost USD 2 billion worth of turnover related to Bitcoin.” If so, the contribution to the sales increase will be almost 10%. That is to say, the introduction of digital assets by a tangible company is creating such synergies.
Walmart is Also Heading into the Digital Asset Payment Market
Furthermore, Walmart has also established a new Fintech start-up this year. It seems Walmart, too, will jump into the digital asset payment market to make another use-case. Though the details about the project are unknown, experts are expecting that Walmart will launch a digital asset trade service, for, last August, Walmart has made a patent application related to creating a digital currency that is corresponding to USD in 1:1 ratio.
In fact, Walmart has announced that their establishment of Fintech start-up is aiming for “providing unique and cheap financial products for those who cannot use banks.” The goal is exactly the same as the aiming point of Diem, Facebook’s digital asset project. Therefore, the business is expecting that Walmart will also take part in this digital asset competition, following Facebook’s Diem.
Korea is also Trying for Digital Asset Payment
There are also some attempts aiming for digital asset payment in Korea. The regulation risks are limiting the final payment through tokens, but several experiments that are trying to use tokens as means of assistance are ongoing. Chai and Danal Fintech are the notable companies. As for Chai, it is issuing Chai-card and offering various payment benefits while acting as a payment service provider on the basis of a blockchain project, Terra. Though there are no actual digital asset payments until now, Chai’s plan is to expand further to the related services later on by utilizing their blockchain technologies.
On the other hand, Pay Protocol, the digital asset payment project of Danal Fintech, is charging a 0.1% fee (Up to 100 Paycoin) to the user who is sending Paycoin through an inter-wallet transaction while charging a 0.2% fee to the affiliates in payment transactions. Also, Danal Fintech says that it can reduce the current payment fees further through blockchain. In a classic payment method, there were PG, a broker agency, and VAN, who is acting as a mediator through a card reader, are interfering between the customer and the payment company. These steps are not just cumbersome for the payment company but also could be one of the factors related to the decrease in income. Pay Protocol explains that the utilization of blockchain can be a solution for this problem that will lead to a reduction of fees. It seems worthy to keep an eye on what differentiation will the private projects around the world will make in order to take a vantage point in this digital asset payment business.
*This research and analysis document has been prepared for the purpose of providing information that can be used as a reference based on our reliable data and information but we cannot guarantee its accuracy or completeness.
*The document has reflected the individual’s opinion and it may not be consistent with the company’s official point of view.
