New payment rails are once again in the spotlight as real-time payments and cryptocurrency emerge as the top focuses for innovators.
In this week’s look at payment rails innovation, the European Union begins paving the way for greater crypto adoption, while Mastercard expands its own crypto accelerator initiative. Separately, research finds B2B payments as the key driver behind surging instant payments volume in the years ahead.
European Union Next To Ease Crypto Adoption
The European Union has become the latest jurisdiction to pave the way for cryptocurrency adoption. Late last week the EU’s executive branch introduced proposed rules to provide legal guidance and clarity for corporates and investors to adopt cryptocurrencies.
Reports said that the legislation aims to also provide greater efficiency to address market fragmentation, with current financial service providers working with cryptocurrencies often operating in only one member state.
“The future of finance is digital,” said Valdis Dombrovskis, the panel’s executive vice president. “During the lockdown, many people shifted to accessing banking and other financial services online. Many more made contactless payments. Developing better financial products for consumers and opening new funding channels for companies will all help the recovery.”
Mastercard Expands Crypto Accelerate Program
As credit card giants broaden use of their card rails, Mastercard is also embracing cryptocurrency with the recently-announced expansion of its Accelerate program, according Blockchain.news reports.
After launching the program last October, Mastercard is broadening the initiative to help FinTechs develop their blockchain-based products and services.
With the expansion, Mastercard is exploring a mix of payment rails by supporting FinTechs that allow cryptocurrency payments via card. The first company it’s working with is Wirex, which provides a crypto-friendly currency account and enables cross-border payments via Visa card. Now, with Mastercard, Wirex has become its first crypto card licensed principal member.
“Mastercard allows the wallet holders in Wirex to use their cryptocurrency for day-to-day transactions,” explained Ashok Venkateswaran, Mastercard Blockchain and Digital Assets lead for Asia Pacific, according to the publication.
In addition to the expanded Accelerate program, Mastercard is also embracing blockchain for B2B use cases. The company operates its Provenance Solution, allowing for track-and-trace capabilities throughout supply chains via blockchain, reports said.
B2B Payments To Drive Instant Payments Adoption
With faster and real-time payments adoption on the rise, the value of transactions moving via instant payment rails is expected to increase sixfold between 2020 and 2025, from $3 trillion to $18 trillion. According to a new report from Juniper Research, Western Europe is a world leader in this market and will continue to drive adoption of instant payments, according to the report.
Corporate payments are also a key driver of surging volume: 17 percent of all B2B and B2C digital payments are expected to be real-time transactions by 2025, though B2B payments alone will account for 89 percent of global transaction value.
“The research identifies that instant payments adoption can be particularly transformative in B2B payments, where value-added capabilities, including automation and additional remittance data enabled by ISO 20022 can be valuable in tackling complex accounts payable processes,” and announcement stated.
Researchers also highlighted the opportunities for global corporates. While domestic payment rail innovation is helping to ready the payments landscape for real-time cross-border payments, the report warns that businesses will have to reconsider their business models as they work to link into various domestic payment schemes and navigate a significantly shifting business landscape as real-time payments become the norm.
