Latin America is ready for crypto – just integrate it with their payment systems

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Web2 monopolies like Facebook and Google, which thrive on exploiting users’ data, have ushered in an era of massive internet centralization in recent years. This concentration of power has enabled huge shares of closed communication and trading platforms, leaving users with little control over how their data is collected.

An emerging concept, Web3, will provide a means to move from centralization to an open-source Internet. A recent report by Andreessen Horowitz (a16z) found that this new digital economy could reach an astonishing 1 billion users by 2031. When done correctly, the decentralized internet allows users to take control of their data and content.

While Web3 promises to revolutionize the Internet and its ability to provide value to users around the world, significant hurdles must be overcome before it can be mass adopted.

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A major obstacle to mass adoption is the lack of local payment integration that many Web3 projects have. For example, a global Web3 project in Germany probably doesn’t understand or offer the preferred payment options of people living in Brazil. While it may seem tedious, accepting local payment options known to customers in their respective regions is a strategic decision that can have a huge impact in gaining market share.

Let’s take a look at how Web3 projects can scale in Latin America and globally by expanding local payment options.

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Understanding local payment preferences

Local payment methods are regionally preferred payment methods. These methods include digital wallets, cash vouchers, local debit networks, wire transfers, open billing and other tactics used worldwide to transact in-store and online. Without local payment capability, Web3 businesses cannot access various markets around the world.

Serving an international clientele by accepting local payments is no easy feat, however, as each region subscribes to significantly different preferred payment options and legal requirements. Web3 projects often don’t have the right infrastructure to reach a global audience on a large scale.

One of the most popular Latin American markets for web3 projects is Brazil, as citizens accept digital transactions faster than in any other country. Brazil has seen a massive rise of its national instant payment solution, PIX, implemented by the Brazilian Central Bank in 2020. For Web3 companies to reach this audience, they need to find a way to connect with local banks and stay compliant with the rules. local regulations.

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COVID-19 accelerated digital transformation in almost every corner of the world. In Mexico, SPEI, a real-time payment system for gross settlements created by the Bank of Mexico, is increasingly being used. Companies can take advantage of systems like SPEI by finding a way to partner with central banks or by hiring a third party to interface with banks for them.

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In addition, the pandemic and the rise of contactless payment underlined the importance of flexible payment options. Online payment methods are gaining importance in Latin America. For example, Mexican supermarket OXXO recently launched a voucher-based banking app that allows users to pay their utility bills and online purchases, which now has more than 1.6 million users. Staying abreast of new developments in the payments landscape is essential to serving customers and keeping pace with the competition.

Establish trust and loyalty

In many countries in Latin America, people are eager to embrace crypto in hopes of a brighter financial future. A recent survey found that Latin Americans are the most optimistic about crypto compared to other regions worldwide. There is a huge opportunity for the Web3 movement to build deep trust among Latin Americans as the centralized system has let them down.

Local payments are a gateway to customer acquisition and loyalty. To effectively enter new markets, rapid integration with all relevant currencies is essential. This results in new end-user conversions and higher success rates, building loyalty and trust with the local audience.

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Improve user experience

It is a widely held belief that a lot of work is needed to streamline the user experience in Web3. With regard to Web3 payments, users are looking for fast, reliable transactions in the payment method of their choice. Web3 projects can improve the user experience by meeting customers where they are and speaking their language.

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Ways to improve the payments user experience include simplifying the onboarding process and providing exceptional customer support. Notifying users every step of the way to ensure their payment is processed eliminates confusion or worry.

Web3 is still in its infancy and has some teething problems in its current state. But completing the due diligence required to deepen infrastructure integrations globally will open up endless possibilities and, ultimately, change the ways individuals socialize, transact and consume data.

Holger Arians is the CEO of Banxa, a provider of payment and compliance infrastructure to the global crypto industry.

This article is for general information purposes only and is not intended and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author only and do not necessarily reflect or represent the views and opinions of TBEN.