Web2 monopolies like Facebook and Google, which thrived on exploiting users’ data, have ushered in an era of greater internet centralization in recent years. This concentration of power has enabled closed platforms for massive communication and commerce, giving consumers control over how their data is collected.
An emerging concept, Web3, provides a mechanism for transitioning from a centralized to an open source Internet. According to a recent report by Andreessen Horowitz (a16z), this new digital economy will reach a staggering 1 billion users by 2031. Done right, the decentralized Internet allows users to control their data and content.
Web3 promises to dramatically transform the Internet and create value for consumers worldwide, but key hurdles must be overcome before mass adoption.
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A major obstacle to mass adoption is the lack of integration of local payments that many Web3 projects have. For example, an international Web3 project based in Germany may not understand or offer payment options preferred by people in Brazil. As boring as it sounds, adopting local payment options that are familiar to customers in their regions is a strategic decision that can have a huge impact on winning market share.
Let’s take a look at how Web3 projects scale in Latin America and globally by expanding local payment options.
Understanding local payment options
Local payment methods are the preferred form of payment by region. These methods include digital wallets, cash vouchers, local debit networks, bank transfers, open billing and other methods used for in-store and online shopping. Without local payment efficiency, Web3 businesses cannot access diverse markets around the world.
However, as each region subscribes to different preferred payment options and regulatory requirements, serving an international customer while accepting local payments is not an easy task. Web3 projects often lack the proper infrastructure to reach a global audience.
Brazil is one of the hottest Latin American markets for Web3 projects, as its citizens are adopting digital transactions faster than any other country. Brazil has taken a serious look at the PIX national instant payment solution implemented by the Brazilian Central Bank in 2020. Web3 companies need to create a way to reach this audience, connect with local banks and comply with local regulations.
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Covid-19 has accelerated digital transformation in almost every corner of the world. In Mexico, the SPEI, a real-time comprehensive settlement payment system created by the Bank of Mexico, is on the rise. Companies can capitalize on systems like SPEI by finding ways to partner with central banks or hire a third party to connect banks for them.
Additionally, the pandemic and the rise of contactless payments have highlighted the importance of flexible payment options. Online payment methods are gaining popularity in Latin America. For example, Mexican convenience store OXXO recently launched a voucher-based banking app that allows users to pay for their bills and online purchases to more than 1.6 million users. Keeping up to date with new developments in the payments landscape is critical to serving customers and keeping up with the competition.
Establishing loyalty and trust
In many countries in Latin America, individuals are eager to adopt crypto in hopes of a better financial future. A recent study shows that Latin Americans are the most bullish on crypto compared to any other region around the world. There is a great opportunity for the Web3 movement to build deep trust with Latin Americans as the centralized system has failed them.
Local payments are the gateway to customer acquisition and loyalty. Rapid integration with all major currencies is essential to effectively enter new markets. This results in new end-user conversions and higher success rates, building loyalty and trust with local audiences.
Enhancing user experience
It is a widely held belief that more work is needed to streamline the user experience on the Web3. When it comes to Web3 payments, users want fast and secure transactions with their preferred payment method. Web3 projects can improve user experience by meeting customers where they are and speaking their language.
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Ways to improve the payment user experience include simplifying the onboarding process and providing exceptional customer support. Informing consumers at every stage so they can be confident that their payment is being processed ensures that there is no confusion or risk.
Web3 is still in its infancy and has some growing pains in its current state. But doing the due diligence to deepen infrastructure integration around the world will open endless possibilities and ultimately change the way individuals share, exchange and consume information.
Holger Aryan He is the CEO of Banxa, a payment and compliance infrastructure provider for the global crypto industry.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.