Professors Gareth W. Peters and Efstathios Panayi (2014) have argued that blockchain technology offers the possibility of disrupting “the world of banking through facilitating global money remittance, smart contracts, automated banking ledgers and digital assets”. It is not then surprising that in 2015, nine major banking institutions — Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, Goldman Sachs, JP Morgan, Royal Bank of Scotland, State Street, and UBS — would join an initiative with financial tech firm R3 to work on the uses of blockchain technology in their markets. Beyond the hype and pyrotechnics proclaiming blockchain as a magical technology that can solve all the problems in the world, the technology itself remains nonetheless powerful. Particularly, the potential of smart contracts — computer protocols which facilitate the execution of a contract between a buyer and a seller, without the mediation of a third party — is already being explored by businesses that want to automate payment processes.
All this sounds rather wonderful, but for all the talk of a crypto-boom (and many stories in the media about fluctuating value), cryptocurrencies have yet to truly take hold and become something consumers actually use. There’s hundreds of billions of dollars invested in cryptocurrencies across the world right now and most of it is just held there, with many seeing it as a simple investment in the hope that the various currencies’ value will see meteoric rises. For these currencies to be fully disruptive, however, and achieve their seemingly limitless potential, they need to become easier to use; to become as ubiquitous and as simple as a credit or debit card. Buying and using cryptocurrencies has been equally challenging for both the average user and the merchant who wants to implement and take advantage of them. This needs to change.
Consumers are accustomed to using credit cards and other simplified online payment methods. The challenge is to make accepting cryptocurrency just as easy by providing a simple and streamlined solution for both users and merchants.
PumaPay is doing just that. By using their unique PullPayment Protocol, the payment process is simplified for the end user. Rather than a customer having to manually push currency from their wallet, PumaPay’s solution allows a merchant to issue what is called a ‘pull request’ and if authorised by the customer the transaction can go through in a matter of seconds. This greatly simplifies the payment process for both sides, enabling a merchant to implement cryptocurrency as a payment method at checkout in a way that’s almost identical to accepting a credit or debit card.
This type of pull request also opens up new ways of using cryptocurrency. PumaPay tokens will be used for recurring direct-debit style transactions, or payments based on the amount of time a product has been used (streaming video being one example). This kind of use case simply wasn’t possible on the blockchain before, but this unique way of ‘pulling’ a crypto payment opens up all kinds of options for both spending and receiving funds. Particularly, PumaPay is currently working on implementing recurring payments which will help in paying for subscriptions and enabling everyday payment scenarios that are otherwise unimaginable over the blockchain.
The benefits of this kind of approach are clear. Customers are seeing a simplified payment process that allows them to take advantage of the security improvements that the blockchain oﬀers, while also getting to use the currency they may have previously purchased but never found a use for.
For merchants, there are several significant benefits. A basic advantage is that PumaPay opens up a way to tap into the billions of dollars’ worth of currency currently available in cryptocurrency — funds which potential customers can now finally start to use in a tangible way. There’s more to the security aspect as well: alongside the inherent security from using blockchain technology, there’s the safety of not having to worry about the potential risk of chargebacks and fines, which can be a big problem with credit card transactions. Fees are also massively reduced. Traditionally, most credit card transactions can see fees of around 2 to 3%, all the way up to 15% for higher-risk transactions, whereas using PumaPay’s solution, there’s only gas fees involved and those are less than 1%. That’s a huge reduction in costs, especially when considering the removal of both the possibility of chargebacks and the risks associated with accepting payments online.
Unlike the lack of flexibility in traditional payment methods, PumaPay wants to retain the spirit of openness that technologies like blockchain have fostered by making their merchant solution open source, and releasing the SDK. This enables simple integration with a range of payment backends, and means that businesses can have full insight into the software that’s processing their payments, something that is a world away from the closed nature of most payment solutions.
More than 70 businesses have committed to use the PullPayment solution so far, with many more showing interest and testing PumaPay’s software. As more companies come on board, cryptocurrencies will start to be seen as an expected payment method. As many PumaPay early adopters will begin using their cryptocurrency for real-world transactions, this will start to increase the sense of legitimacy around this type of finance and it will start to extend out to more consumers. The benefits around security and privacy will become clearer to a more mainstream audience, and with PumaPay’s solutions helping to remove the previous downsides associated with cryptocurrencies, this wider audience will eventually experience the convenience that crypto can oﬀer. Only with such significant shifts, will it be obvious the full potential of cryptos, especially when it’s widely used as a valid and cost-effective method in everyday payments.
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