Web2 monopolies such as Facebook and Google, thriving on the exploitation of user data, have ushered in an era of massive Internet centralization in recent years. This concentration of power has enabled a huge share of communications and commerce to be closed platforms, giving users little control over how their data is collected.
The emerging concept, Web3, will provide a vehicle for the transition from centralization to an open source Internet. A recent report from Andreessen Horowitz (a16z) found that this new digital economy could reach a staggering 1 billion users by 2031. Done right, the decentralized internet will allow users to take control of their data and content.
While Web3 promises to radically change the Internet and its ability to deliver value to users around the world, there are key hurdles to overcome before it can be widely adopted.
One of the main obstacles to mass adoption is the lack of local payment integration that many Web3 projects have. For example, a global Web3 project based in Germany probably does not understand or offer preferred payment options of people living in Brazil. Although it seems tedious, adopting local payment options that are familiar to customers in their respective regions is a strategic decision that can have a huge impact on gaining market share.
Let’s see how Web3 projects can scale in Latin America and globally by expanding local payment options.
Explanation of local payment preferences
Local payment methods are regionally preferred payment types. These methods include digital wallets, money orders, local debit networks, wire transfers, open billing and other tactics used globally for in-store and online transactions. Without local payment fluidity, Web3 companies are unable to access different markets around the world.
However, serving an international clientele by accepting local payments is no easy task, as each region has vastly different preferred payment options and regulatory requirements. Web3 projects often don’t have the right infrastructure to reach a global audience at scale.
One of the hottest The Latin American market for Web3 projects is Brazil, as its citizens are adopting digital transactions faster than any other country. Brazil saw a massive uptake of its national instant payment solution, PIX, implemented by the Brazilian central bank in 2020. To reach this audience, Web3 companies must find a way to connect with local banks and stay compliant with local regulations.
COVID-19 has accelerated digital transformation in almost every corner of the world. in mexico adoption of SPEI, a real-time gross payment system created by the Bank of Mexico, is growing. Companies can capitalize on systems like SPEI by finding a way to partner with central banks or by employing a third party to liaise with banks on their behalf.
In addition, the pandemic and the rise of contactless payments have highlighted the importance of flexible payment options. Online payment methods are increasing a major move in Latin America. For example, Mexican store OXXO recently launched a voucher-based banking app that allows users to pay for utility bills and online purchases, which now boasts more than 1.6 million users. Keeping up with new developments in payments is vital to serving customers and keeping up with the competition.
Establishing trust and loyalty
In many Latin American countries, individuals are eager to embrace cryptocurrencies in hopes of a better financial future. A recent study found that Latin Americans are the most bullish on cryptocurrencies compared to any other region in the world. The Web3 movement has a huge opportunity to build deep trust with Latinos because the centralized system has failed them.
Local payments are the gateway to customer acquisition and loyalty. In order to effectively enter new markets, it is essential to create rapid integration with all relevant currencies. The result is new end-user conversions and higher success rates, building loyalty and trust with local audiences.
Improving the user experience
It is widely believed that a lot of work is needed to streamline the user experience in Web3. When it comes to Web3 payments, users are looking for fast and 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.
Ways to improve the user experience with payments include simplifying the registration process and providing exceptional customer support. Keeping users informed every step of the way to make sure their payment is being processed ensures there is no confusion or worry.
Web3 is still in its infancy and has some issues in its current state. However, achieving the due diligence required to deepen the integration of infrastructure around the world will open up endless possibilities and ultimately change the ways in which individuals interact, trade and use data.
Holger Arians is the CEO of Banxa, a payment and compliance infrastructure provider for the global crypto industry.
This article is for general informational purposes and is not intended and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.