Payments

Business owners should get off PayPal and move to the blockchain

Cryptocurrency platforms offer lower fees and more convenience than their corporate competitors. That’s a boon for entrepreneurs.

Do you believe that in five years every second transaction in e-commerce will be settled on blockchain? No? Well, that’s what people thought of plastic credit cards versus cash a few decades ago when it came to traditional stores.

There is no doubt that Web3 will drastically transform the way e-commerce operates. Using cryptocurrency payments in e-commerce stores will become just as common as accepting PayPal, Klarna, Visa or Mastercard. Stores that don’t adapt their e-commerce platforms to accept cryptocurrencies will soon find themselves out of business.

How Web3 has changed the e-commerce landscape

Thanks to the converging forces of Web3 — blockchain, decentralized finance (DeFi), AI and machine learning — new, smart algorithms can analyze and adapt to provide user-centric experiences. In addition, Web3 will be much more inclusive than previous versions of the Web. The decentralized nature of Web3 creates the perfect platform for the fast and transparent flow of information that’s not subject to censorship by a central authority.

In addition, Web3 eliminates intermediaries like Facebook that take a cut of users’ cash (and personal data) when they buy something online. At the same time, all the details of our transactions are public — for better or worse. Enhancing the security and convenience of online transactions will increase the volume of e-commerce transactions and encourage businesses to adopt crypto payments.

As more businesses move from Web2 to Web3, many merchants and consumers have begun using crypto payment solutions.

In Web2, most online payment platforms such as PayPal and Stripe charge transaction fees of around 4%. This, of course, makes it difficult for businesses to stay competitive without raising prices. Not only are crypto payments frictionless, but they’re also gaining traction as a payment method. With stablecoins today, people no longer have to worry about converting to fiat and the hassle of withdrawing funds to their bank accounts.

The power of blockchain in old and new business models

Similar to the Web2 e-commerce adoption, there’s a long road ahead before Web3 can provide the full range of benefits mentioned earlier. However, the introduction of smart contracts and Web3 platforms like Hyperledger has drastically changed the landscape of value exchange. Hyperledger Fabric was developed by enterprises like IBM for specific business cases that optimize supply chain operations. Access to the ledger using Fabric allows businesses to view the same unchangeable data, which guarantees accountability and minimizes the chance of counterfeiting.

Consumers can keep up with the progress of their orders and trace each item back to its origin. At the same time, supply chain operators can monitor inventory levels and shipments, take appropriate action to resolve issues and detect fraud. This allows the consumer and the company to expect delivery at a certain time. All of the packages can be easily monitored via the blockchain explorer while protecting the customer’s privacy.

Additionally, with blockchain, a global whitelist of genuine or reliable customers and vendors can be created and owned, something that Unstoppable Domains is doing with its identity verification for Web3. Such a whitelist reduces false positives and helps detect actual fraud. Unlike traditional e-commerce payments, Web3 allows people to place their orders easily by eliminating intermediaries and chargebacks.

A new regulatory environment

The advent of Web3 in e-commerce will change compliance requirements related to personal data, including the European Union’s General Data Protection Regulation, raising important questions such as identity authentication without revealing personal, sensitive information.

However, Web3 developers already experiment with the use of zero-knowledge proofs as the solution to prove to the other party that they are in possession of certain information (such as nationality or age above the limit) without actually revealing the details.

It is not necessarily going to be up to clients to decide how much personal data they’re going to give. That is only going to happen if companies adopt the applicable technology and regulators allow it. However, that may not happen unless someone is willing to make an argument in favor of it.

With such vast possibilities, more businesses should be considering jumping on the Web3 bandwagon. After all, they can elevate their transparency, reputation, and cost management in the e-commerce game to stay ahead of the curve while moving digital data safely and freely across borders. For that to happen, clear regulations must be devised to support the broader adoption of blockchain technology in this space.

Companies would also have an instrumental role to play in the world of Web3: ensuring that they are equipped with the latest security solutions to prevent themselves from becoming the target of cybercriminals. Recent occurrences of cyber crimes have seen hackers making away with funds, as well as the personal private information of customers, which inevitably leads to reputational damage to the organization.

Having the latest tools and systems would mean little without having a sufficiently staffed team of information security professionals to ensure that key systems vulnerabilities are addressed on a timely basis, and key controls are subject to testing on a regular basis. Adequate resources and attention would definitely have to be devoted by Web3 companies in order to address these areas of risk in the course of their business.

Raymond Hsu is a co-founder and the CEO of Cabital, a cryptocurrency wealth management platform. Prior to co-founding Cabital in 2020, Raymond worked for fintech and traditional banking institutions, including Citibank, Standard Chartered, eBay and Airwallex.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Binance partners with Ukrainian supermarket chain to accept crypto through Pay Wallet.

Customers who use the Binance Pay Wallet to pay for their orders will be eligible to enter a rewards program.

Binance announced Friday that it has partnered with the Ukrainian supermarket chain VARUS, saying it will enable cryptocurrency payments for grocery purchases through its Binance Pay Wallet.

The grocery store is one of the largest companies in Ukraine with over 111 stores across 28 cities in the country. The company said that this partnership will allow its customers to access instant cryptocurrency payments and fast delivery in 9 cities in Ukraine, namely; Kyiv, Dnipro, Kamianske, Kryvyi Rih, Zaporizhzhia, Brovary, Nikopol, Vyshhorod, and Pavlograd.

The companies have also announced a “reward fund promotion”, where customers who order anything from the VARUS Delivery program worth over UAH 500 and pay with Binance Pay, will be rewarded with UAH 100.

A month ago, a Ukrainian POS and crypto payments company called Whitepay, rolled out a new program that enabled Ukrainians to purchase electronics and other products with cryptocurrency.

In attendance at this year’s Kyiv Tech Summit hosted on Sept 6 -9 in Ukraine, Ethereum Founder Vitalik shared that: “Ukraine could well become the next Web3 hub”. He shared:

“A country can become a Web3 hub if its citizens are actively interested in this technology and decide to make a major contribution to its development,” Buterin added. “Ukraine has both the capabilities and the determination to do this.”

US Treasury report encourages instant payment, recommends more CBDC research

In one of three reports released simultaneously Friday, the Treasury Department talks cautiously about stablecoins and CBDC in the context of wider payment technology.

United States President Joe Biden ordered more than a dozen reports to be written when he released his Executive Order (EO) 14067 “Ensuring Responsible Development of Digital Assets.” Five had due dates within 90 days, and the last three were published simultaneously by the Treasury Department on Sept. 16. The reports were prepared in response to instructions in Sections 4, 5 and 7 of the EO.

The report ordered in EO Section 4 is titled “The Future of Money and Payments.” The report looks at the several payment systems currently in use that are operated by the Federal Reserve or the Clearing House, which is owned by a group of major banks. These will be supplemented by the non-blockchain FedNow Service instant payment system that is expected to begin operating in 2023.

Stablecoins are introduced along with FedNow under the heading of “Recent innovations in money and payments.” They are subject to a somewhat cursory discussion that examines the potential deficits of reliability and Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) capacity, about which it concludes:

“Financial institutions that deal in stablecoins are subject to AML/CFT obligations. However, if a stablecoin was widely adopted globally as a means of payment, the stablecoin could pose greater risks for illicit finance due to uneven implementation of global AML/CFT standards for digital assets.”

The bulk of the report is dedicated to a central bank digital currency (CBDC). Although the report raises issues such as the payment of interest on a CBDC, the cost of operating a CBDC and public-private partnerships, the discussion focuses heavily on risks.

The interaction of CBDCs and privacy protection is given subtle consideration:

“While physical cash can enable anonymous transactions, a CBDC could potentially be used at much greater scale and velocity. […] Therefore, anonymity in a CBDC system could present greatly expanded money laundering, proliferation financing, and terrorist financing risks compared to physical cash. […] A CBDC could also offer valuable new opportunities for improved supervision and AML/CFT compliance.”

The report concludes with recommendations that CBDC research be continued “in case one is determined to be in the national interest.” In addition, instant payment technology should be encouraged to improve the payment landscape. A regulatory framework should be established, and cross-border payment should be prioritized.

ePayments shutters as FCA Anti-Money Laundering regulations tighten

The electronic payment provider is permanently closing operations due to the inability to satisfactorily meet the standards of the FCA after suspending operations for three years.

The electronic payments provider ePayments is putting the final nail in the coffin of its operations. ePayments issued email notices to clients on Tuesday, stating that it is officially closing its business operations in light of local regulations.

The financial services provider was one of the largest electronic payment providers in the United Kingdom. However, almost three years ago, it was ordered to cease operations by the U.K.’s Financial Conduct Authority (FCA) due to alleged weaknesses in its “financial crime controls.”

At the time of the initial suspension, it was estimated that ePayments held $149 million, or 127.5 million Great British pounds, in customer funds, which were temporarily inaccessible.

After years of restructuring efforts, the company attributes the final closure to “extremely challenging and unprecedented global economic conditions,” years of halted operations and being unable to satisfactorily meet the FCA’s requirements.

It says funds are safe and encourages former customers to withdraw funds in eWallets and stand by for refund information. Users on Twitter responded to the update with a mixture of relief and frustration, with one user saying he had funds stuck in ePayments since 2020:

Thank god I transfer out my fund last 2 months ago as soon as you unblock the fund access. My fund was stuck since 2020.

— Hoe2be (@hoe2be2) September 13, 2022

While another tweeted to the company that his funds were still inaccessible.

This development comes as the U.K.’s financial regulators have been tightening the reins on the industry. The FCA recruited nearly 500 new employees over the last year in accordance with its new three-year strategy.

One of the positions filled included the newly created director of payments and digital assets which will oversee matters such as e-money, payment and crypto-asset markets. The position was filled by former director at the National Economic Crime Command.

While some regulators in the country believe the U.K. cannot afford to send mixed signals as to its stance on digital assets and payment services, it still appears to be the case.

The newly appointed finance minister, Kwasi Kwarteng, has not addressed the issue of crypto regulations and advertising watchdogs recently cracked down on crypto-related ad content on Instagram.

On the other hand, the economic secretary made a statement on Sept. 7 in which he said he wants to make the U.K. a crypto hub and top choice for innovators under the new prime minister.

Russia aims to set rules for crypto cross-border payments by year’s end

Russia might become the first country in the world to allow cross-border crypto payments while banning local crypto payments, a fintech expert in the Russian State Duma said.

Russian Prime Minister Mikhail Mishustin on Tuesday officially instructed the government to come to a consensus regarding crypto regulation in Russia by Dec. 19, 2022.

The prime minister specifically called on the Duma and other state authorities to come up with coordinated policies on regulating the issuance and circulation of digital currencies in Russia. Mishustin also asked regulators to finalize regulations for cryptocurrency mining and cross-border transactions in digital currencies.

The official stressed that the upcoming draft crypto regulations should be aligned with the Russian Finance Ministry, the central bank, Anti-Money Laundering authority Rosfinmonitoring, the Federal Tax Service and the Federal Security Service.

The latest news brings yet another official confirmation that Russia has been growing increasingly serious about the possibility of cryptocurrencies for cross-border transactions.

Last week, Deputy Finance Minister Alexei Moiseev reported that the Bank of Russia has agreed with the finance ministry to legalize crypto for cross-border payments. Despite its willingness to authorize cross-border transactions, the Russian central bank still opposed the legalization of local crypto exchanges as well as legalizing cryptocurrency as a means of payment.

The feasibility of banning domestic crypto exchanges while allowing cross-border payments apparently raises a lot of questions, especially given that Russia has yet to come up with a framework to provide such laws.

Russia might be the first country in the world to authorize cross-border crypto payments while banning local crypto payments, according to Maria Agranovskaya, a legal attorney and fintech expert in the Russian State Duma, told Cointelegraph. “This isn’t a common approach, to my knowledge,” she said.

The question of how exactly Russia plans to differentiate between domestic and cross-border crypto payments has yet to be answered, Agranovskaya noted. “This distinction is not yet in existence. All ‘foreign’ crypto is regarded as digital currency and that’s it for now,” she said, adding:

“It is absolutely unclear at the moment. I presume the matter shall be in line with the currency control regulations — tax residents in the local territory would not be allowed to use crypto for payments internally.”

Russia has emerged as one of the most uncertain jurisdictions to crypto, despite adopting its major crypto-related law, On Digital Financial Assets, in 2020. The law prohibited Russians from using cryptocurrency as payment but didn’t ban activities like crypto trading and mining in the country. Russian financial regulators have not approved any local crypto trading platform, only allowing crypto trades through foreign crypto exchanges like Binance.

El Salvador celebrates Bitcoin anniversary: A year of ups and downs

El Salvador’s first Bitcoin anniversary comes amid BTC losing over 60% of value in one year, but that doesn’t really mean that the country’s Bitcoin experiment has failed.

Sept. 7, 2022 marks exactly one year since El Salvador became the first country in the world to adopt Bitcoin (BTC) as legal tender by enforcing the Bitcoin Law.

Advocating for Bitcoin as legal tender last year, El Salvador President Nayib Bukele promised that Bitcoin adoption would benefit the 70% of the local population that lacked oaccess to banking services as of 2021.

The Salvadoran government also touted Bitcoin as a tool to attract foreign investment, create new jobs and cut reliance on the U.S. dollar in the country’s economy.

One may question the current real benefits of Bitcoin adoption in El Salvador as Bitcoin has lost roughly 60% of its value since the country adopted the cryptocurrency as legal tender.

Exactly on this day one year ago, BTC was trading at around $46,000, according to data from CoinGecko. On Sept. 6, 2021, the Salvadoran government made their first Bitcoin purchase, buying 200 BTC at $10.36 million, or at an average price of $51,800. That makes a huge contrast with current BTC prices, as Bitcoin tumbled below $19,000 on Tuesday. At the time of writing, Bitcoin is trading at $18,806, down more than 64% over the past year.

*Bitcoin one-year price chart. Source: CoinGecko*

According to data from Nayib Bukele’s portfolio tracker, El Salvador is now down on all 10 Bitcoin purchases that the government has made since adopting BTC as legal tender. The Salvadoran government has bought a total of 2,381 BTC so far, which at current prices is worth $62 million less than the price El Salvador paid for its current BTC holdings.

El Salvador Minister of Finance Alejandro Zelaya previously emphasized that despite dropping prices, the country didn’t experience any losses on its BTC purchases because they did not sell the coins. The Salvadoran government has also repeatedly delayed its Bitcoin bond project, citing unfavorable market conditions and geopolitical issues.

Amid plummeting crypto prices and the ongoing bear market, some industry observers started referring to El Salvador’s Bitcoin adoption as a “failed Bitcoin experiment.” Others suggested that that might not be the case as the country has apparently had some positive impact on El Salvador’s economy and financial market, including the cost of transactions.

Bram Cohen, the creator of BitTorrent and founder of Chia Network, took to Twitter on Tuesday to point out that the amount of benefits often “isn’t very correlated with the amount of money it makes.” He suggested that some banks had to cut rates due to the emergence of cheaper Bitcoin transactions in El Salvador.

The same thing may be going on in El Salvador. Now that there’s a cheap-but-annoying method of doing remittances using crypto, the banks have had to cut rates to the point where their slightly better user experience is worth the price

— Bram Cohen (@bramcohen) September 6, 2022

According to the El Salvador Central Reserve Bank, Salvadorans living abroad sent more than $50 million in remittances from January to May 2022. The adoption of Bitcoin and the Salvadoran government-backed Chivo wallet also contributed to a 400% increase in the Lightning Network transactions in 2022.

“El Salvador is going to be the proving ground for so much innovation within Bitcoin,” Ibex Mercado CEO Jose Lemus said. He noted that there’s no other jurisdiction that combines the “regulatory framework, the political will, the adoption and range of tools, and most crucially of all, the need for Bitcoin.” He added:

“This makes El Salvador the perfect place to safely experiment with new Lightning applications and to build a thriving ecosystem of trusted, proven, and interconnected services.”

El Salvador’s Bitcoin Law has also succeeded in terms of attracting foreign investment and tourism. As previously reported by Cointelegraph, tourism in El Salvador has soared in the first half of 2022, surging about 82% as 1.1 million tourists have flocked to the country this year.

Russian gov’t working on stablecoin settlement platform between friendly nations: State media

“Stablecoins can be pegged to some generally recognized instrument, for example, gold, the value of which is clear and appreciable for all parties involved,” said Alexey Moiseev.

Russia’s Finance Ministry has reportedly begun working with the governments of “friendly” nations to establish a cross-border stablecoin-based payments platform.

According to a Tuesday report from Russia state-owned news agency TASS, Deputy Finance Minister Alexey Moiseev said the government was looking to create the settlement platform to avoid the use of U.S. dollars and euros. The finance minister reportedly said the Russian government would need to impose additional regulations to enact the platform between itself and friendly nations — possibly including China, Belarus and North Korea.

“We offer mutually acceptable tokenized instruments that will be used on these platforms, which are essentially clearing platforms that we are currently developing with countries,” said Moiseev. “Stablecoins can be pegged to some generally recognized instrument, for example, gold, the value of which is clear and appreciable for all parties involved.”

Russia has been the target of severe sanctions imposed by the United States and the European Union following the country’s invasion of Ukraine in February. The EU announced in March it planned to remove many Russian banks from the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, messaging system, and the U.S. Office of Foreign Assets Control added several Russian entities and nationals to its list of Specially Designated Nationals.

Amid the war in Ukraine, reports have suggested Russian officials had been exploring using cryptocurrencies to evade the imposed sanctions. In July, President Vladimir Putin signed a bill banning digital assets as payments into law, but the country’s central bank has reportedly considered using crypto for cross-border payments.

Bank of Russia agrees to legalize crypto for cross-border payments: Report

Historically opposed to the idea of using crypto as a payment method, the Bank of Russia has reportedly agreed to allow cross-border payments in crypto due to geopolitical changes.

The Bank of Russia, the country’s central bank, has reportedly admitted that cross-border payments in crypto are inevitable in the current geopolitical conditions.

The Russian central bank has been rethinking the approach to regulating crypto and agreed with the finance ministry to legalize crypto for cross-border payments, the local news agency TASS reported on Monday.

Deputy finance minister Alexei Moiseev reportedly said that the Bank of Russia and the finance ministry expect to legitimize cross-border payments in crypto soon.

Moiseev outlined the importance of enabling local crypto services in Russia, noting that many Russians rely on foreign platforms to open a crypto wallet. “It is necessary to do this in Russia, involving entities supervised by the central bank, which are obliged to comply with Anti-Money Laundering and Know Your Customer requirements,” the official stated.

Russian lawmakers have been historically opposed to the idea of using cryptocurrencies as a payment method. In 2020, Russia adopted a major crypto law, “On Digital Financial Assets,” which officially prohibited the use of cryptocurrencies like Bitcoin (BTC) for payment purposes. The Bank of Russia has been skeptical about the idea of cryptocurrency payments because it wanted to protect the Russian ruble as the only legal tender in the country.

The idea of crypto payments for national trades in Russia surfaced in late 2021. Then, Russian President Vladimir Putin said it was “still premature” to use crypto for trades of energy resources like oil and gas.

The situation has apparently changed amid Western economic sanctions following Russia’s invasion of Ukraine. In May, the Minister of Industry and Trade declared that Russia would legalize crypto payments “sooner or later.” Bank of Russia governor Elvira Nabiullina also later suggested that crypto can be used for cross-border payments, but only if crypto doesn’t get into Russia’s domestic financial system.

According to Moiseev, the central bank has reconsidered its approach to regulating the industry, “given that the situation has changed.” He added that the planned infrastructure is “too rigid” for the use of cryptocurrencies in cross-border settlements. “Which we certainly must legalize somehow,” he concluded.

Hardware wallet Trezor enables direct crypto purchases with MoonPay

The new integration with MoonPay and SatoshiLabs-founded Invity platform provides buy, sell and exchange features directly in the Trezor wallet.

Hardware walletcompany Trezor is moving to enable direct crypto purchases with a new partnership with the crypto fintech startup MoonPay.

Trezor, Czech Republic-based hardware wallet provider, has partnered with MoonPay to allow its customers to buy crypto directly in their hardware wallet, according to an announcement on Wednesday.

Backed by major industry investors including Tiger Global and Coatue, MoonPay is a crypto payment service that allows users to buy and sell cryptocurrencies and nonfungible tokens (NFTs) using debit cards, credit cards and other payment methods. In April 2022, the firm raised $87 million from investors like Justin Bieber and Snoop Dogg to focus on NFTs and Web3.

The collaboration with MoonPay builds on Trezor’s previous partnership with Invity, a crypto exchange comparison tool integrated directly into the wallet.

Like Trezor, Invity is a startup operating under the parent firm, SatoshiLabs. The platform connects clients with trusted partner exchanges to provide direct-to-custody trades with various payment methods. Combined, the three platforms provide buy, sell and exchange features directly in the Trezor wallet.

The new integration allows customers to buy and sell a wide number of cryptocurrencies through a noncustodial crypto wallet, helping users to better protect their funds. At the time of writing, Trezor supports more than 1,000 cryptocurrencies, including Bitcoin (BTC), Ether (ETH), Tether (USDT), BNB, Cardano (ADA) and others.

The latest news is yet another milestone for crypto purchases on Trezor, as the hardware wallet has been previously supporting crypto buys on its native app Trezor Suite via an in-app Trade feature. The option has been available through the crypto exchange comparison tool created by Invity since at least late 2020, Trezor said in one of its blog posts.

“By allowing Trezor owners to buy crypto directly from their wallet, we’re tapping into a committed cohort of cryptocurrency users who take security very seriously,” MoonPay senior business development manager Antonio Talledo said. “Through this partnership with MoonPay, we’re taking the lead to bring secure, borderless and easy financial freedom to billions”

Russian PM takes cue from Iran’s crypto payment permit for imports

The adoption of digital assets provides a good opportunity to ensure uninterrupted payments for imports and exports, Russia’s prime minister said.

Russia may soon be taking a cue from Iran by using cryptocurrencies for imports, according to commentthe Russian prime minister.

The adoption of digital assets is necessary as a “safe alternative” for cross-border payments, Russian Prime Minister Mikhail Mishustin declared at a strategic session on the development of the domestic financial system on Tuesday.

The prime minister added that digital assets provide a good opportunity to ensure uninterrupted payments for imports and exports. Mishustin also pointed out the importance of ensuring tech infrastructure independence and the cybersecurity of financial institutions, stating:

“We need to intensively develop innovative areas, including the adoption of digital assets. This is a safe alternative for all parties that can guarantee uninterrupted payment for the supply of goods from abroad and for export.”

Mishustin’s remarks came shortly after Iran’s Industry of Mines and Trade Ministry approved the use of cryptocurrencies for imports. The local media reported on Monday that the authority moved into crypto payments due to the ongoing international trade sanctions against Iran.

Russian authorities have previously considered crypto for international payments. In May, Ivan Chebeskov, head of the Financial Policy Division within Russia’s Finance Ministry, said that the authority was considering the possibility of incorporating crypto payments. “The idea of using digital currencies in transactions for international settlements is being actively discussed,” he said at the time.

The idea of international payments in crypto even received support from Russia’s biggest governmental crypto skeptic, the Bank of Russia. In June, Bank of Russia governor Elvira Nabiullina stated that cryptocurrencies can be used in cross-border or international payments but only if they don’t get into Russia’s domestic financial system.