Do We Need “Blockchain Payments”?
In recent years, blockchain technology has rapidly developed globally and has begun to make its mark in various industries, including the payment sector.
Taiwan currently offers a wide range of payment options, including cash, credit cards, and various mobile payment methods, allowing users to choose according to their needs and preferences.
In this situation, do we need “blockchain payments”?
The current situation of blockchain payments in Taiwan
Due to the incomplete infrastructure between blockchain payments and traditional payments, and the fact that most merchants do not have cryptocurrency wallets to receive payments, most blockchain payments in Taiwan currently require an intermediary platform to convert the users’ cryptocurrency payments into fiat currency for the merchants.
For example, local exchange MaiCoin in Taiwan had plans to enter the blockchain payment field as early as 2015. MaiCoin’s Chief Strategy Officer, Li Kun-ying, recalled that at that time, mobile payments were not yet popular, and even Ethereum had not been created. However, most merchants had not heard of Bitcoin, and the volatility of cryptocurrencies made it impossible to promote blockchain payments.
As more people become familiar with cryptocurrencies, some merchants have become interested in blockchain payments.
The emergence of stablecoins has solved the problem of cryptocurrency price volatility, and Layer 2 blockchain has made transactions on the blockchain faster and cheaper. With the maturity of these developments, MaiCoin launched its blockchain payment service called “MaiPay,” allowing users to make payments with cryptocurrencies by scanning QR codes on their mobile phones, just like using mobile payments.
Advantages of blockchain payments
Li Kun-ying stated that the main purpose of blockchain, from the beginning, was to achieve decentralized transactions, making it suitable for payment services.
Firstly, blockchain payments have the advantage of decentralization. In theory, they do not require relying on an intermediary institution for transaction verification and settlement, which can reduce transaction costs and improve efficiency.
Secondly, blockchain payments have the characteristics of transparency and immutability. All transaction information is recorded on the blockchain and cannot be modified or deleted. This ensures the security and credibility of the payment system and reduces issues related to fraud and money laundering.
Lastly, blockchain payments have the advantage of cross-border transactions. Due to the global and borderless nature of blockchain technology, payment transactions can be settled instantly between different countries and regions without the need for complicated remittance procedures and high transaction fees.
Looking at daily payment scenarios, it may not seem necessary to introduce blockchain payments. However, Li Kun-ying believes that blockchain payments can provide users with more diverse payment options. “Just like how users can choose which credit card to use for higher rewards based on the consumption scenario, when users have more stablecoins, they can freely choose whether to make payments with cryptocurrencies.”
Challenges faced by blockchain payments
However, Li Kun-ying stated that most users perceive cryptocurrencies more as investment products than payment tools.
In addition, the infrastructure for cryptocurrency payments is still incomplete, and cryptocurrencies carry negative labels that are deeply ingrained in the public’s mind. Moreover, Taiwan already has a wide variety of payment methods available, and both merchants and the public do not need or want to accept more emerging payment methods. Therefore, the promotion of blockchain payments in Taiwan faces many challenges.
Challenge 1: User habits
User acceptance and popularity are the biggest challenges for blockchain payments in Taiwan. Despite the advantages of decentralized, transparent, and secure blockchain payments, the general public still has relatively low acceptance of these emerging payment methods. It is necessary to further raise awareness and trust among users to promote the application and popularity of blockchain payments.
Challenge 2: Regulatory issues
The uncertainty of regulatory environments is also one of the main challenges faced by blockchain payments in Taiwan. Currently, Taiwan’s regulation of blockchain payments is still in a relatively unclear state, lacking clear regulatory frameworks and norms. This leads to legal risks and uncertainties for companies engaging in blockchain payment businesses, which in turn hinder the further development of blockchain payments.
Blockchain payments are visible in countries like El Salvador and Turkey, mainly because the government supports them. Cai Yi-ting pointed out that if Taiwan wants to achieve the same level of development in blockchain payments, it will also need government support. With government support, the popularization of blockchain payments will gradually expand. Although it is not possible to see a sudden increase in users overnight, over time, blockchain payments will eventually become a part of people’s lives.
Challenge 3: Technical issues
As blockchain technology is still in continuous development and improvement, it will take time to establish connections between traditional finance and Web3 finance. For merchants, adopting new payment methods means that everyone from store managers to frontline staff must have a clear understanding of the specific operating procedures and be aware of any potential issues and troubleshooting methods that may arise from using blockchain payments.
For merchants, this also means a significant cost in terms of manpower training. Moreover, currently, opening up blockchain payments does not bring a large number of customers to merchants. Therefore, most businesses still maintain a wait-and-see attitude towards blockchain payments.
Taiwan already has a diverse range of payment methods, and especially with different payment QR code standards that cannot be interoperable. However, the recent integration into a single “TWQR” code allows people to use any payment app to scan the same “TWQR” code for checkout. Although blockchain payments currently do not have many users or open channels, if there is more policy support in the future and gradually becomes popular, it will ultimately provide consumers with more diverse and tailored payment options.
Proofread by: Gao Jingyuan