Payments network Ripple, in conjunction with research and advisory firm Celent, recently released their 2020 Blockchain in Payments report. The two conducted a survey to better understand adoption of blockchain-based payments across retail and digital banking, payment aggregators, and money transmitters.
The findings of the study illustrate how far the banking industry has come with regards to blockchain adoption for payments and what challenges lay ahead. In the end, Ripple offers suggestions for helping the blockchain reach mainstream adoption in payments.
The study surveyed 854 respondents across 22 countries who are directly
involved with payment services at their organization and found:
- 59% of respondents are in production or near production for payments-related use cases.
- 44% of respondents leveraging the blockchain recorded strong business growth in the past 12 months.
- 98% of respondents working with the blockchain for payments have also deployed the technology for non-payments use cases.
- 99% of respondents’ organizations would consider using a digital asset as a currency or as a means to instantly process cross-border payments.
Overall, Ripple found that businesses that have leveraged blockchain technology for cross-border payments cite four benefits: improved data quality, increased data security, cost savings, and business growth. Interestingly, the company noted that COVID-19 has had a net positive impact on the use of the blockchain in payments. Both the pandemic and the economic downturn have increased demand for payments services.
However, there are challenges ahead for the emerging technology. Specifically, Ripple noted difficulties in expediting implementation for financial institutions and securing regulatory clarity as two outstanding issues holding back more prolific use of the blockchain for payments.
With this in mind, Ripple issued three recommendations to help firms fully harness the blockchain for growth. First, governments must increase regulatory clarity. “Without clarity, mature markets will fall behind and be challenged to catch up,” the report notes. Second, integration costs must be lowered. Fortunately, standard APIs and cloud-based services are already helping to bring down costs. Finally, security must be addressed. Though blockchain networks are inherently secure, they must vet participants and prevent bad actors from gaining access.