Do We Need “Blockchain Payments”?
In recent years, blockchain technology has rapidly developed globally and has begun to make its mark in various industries, including the payment sector.
Taiwan currently offers a wide range of payment options, including cash, credit cards, and various mobile payment methods, allowing users to choose according to their needs and preferences.
In this situation, do we need “blockchain payments”?
The Current State of Blockchain Payments in Taiwan
Due to the incomplete infrastructure between blockchain payments and traditional payments, and the fact that most merchants do not have cryptocurrency wallets to receive payments, blockchain payments in Taiwan currently require an intermediary platform to convert users’ cryptocurrency payments into fiat currency for merchants.
For example, Taiwanese exchange MaiCoin planned to enter the blockchain payment field as early as 2015. MaiCoin’s Chief Strategy Officer, Lee Kun-Ying, reminisced that at that time, not only was mobile payment not popular, but even Ethereum had not been born. However, most merchants had never heard of Bitcoin, and the volatility of cryptocurrencies made it impossible to promote blockchain payments.
As more people started to become familiar with cryptocurrencies, some merchants began to show interest in blockchain payments.
The emergence of stablecoins solved the problem of cryptocurrency price volatility, and Layer 2 blockchain technology made transactions on the blockchain faster and cheaper. With the timing becoming more mature, MaiCoin launched its blockchain payment service, “MaiPay,” allowing users to make payments with cryptocurrencies by scanning QR codes on their mobile phones, similar to using mobile payments.
Advantages of Blockchain Payments
Lee Kun-Ying stated that the main purpose of blockchain was to achieve decentralized transactions, making it well-suited for payment services.
Firstly, blockchain payments have the characteristic of decentralization. In theory, they do not require reliance on an intermediary institution for transaction verification and settlement, reducing transaction costs and increasing transaction efficiency.
Secondly, blockchain payments are transparent and tamper-proof. All transaction information is recorded on the blockchain and cannot be modified or deleted, ensuring the security and credibility of the payment system and reducing the problems of fraud and money laundering.
Lastly, blockchain payments have the advantage of cross-border transactions. As blockchain technology is global and borderless, payment transactions can be settled instantly between different countries and regions without the need for cumbersome remittance procedures and high transaction fees.
Looking at everyday payment scenarios, it may seem unnecessary to introduce blockchain payments. However, Lee Kun-Ying believes that blockchain payments can provide users with more diverse payment options. “Just like how users can choose which credit card to use based on the rewards for different consumption scenarios, when users have more stablecoins, they can freely choose whether to make payments with cryptocurrencies.”
Challenges Faced by Blockchain Payments
However, Lee Kun-Ying stated that most users perceive cryptocurrencies more as investment products rather than tools for transactional payments.
Additionally, the infrastructure for cryptocurrency payments is currently incomplete, and there are still negative perceptions of cryptocurrencies among the general public. Moreover, Taiwan already has a wide range of payment methods, and both businesses and individuals do not need or want to adopt more emerging payment methods. Therefore, the promotion of blockchain payments in Taiwan faces many challenges.
Challenge 1: User Habits
User acceptance and penetration can be said to be the biggest challenge for blockchain payments in Taiwan. Although blockchain payments have advantages such as decentralization, transparency, and security, the general public still has a relatively low acceptance of these emerging payment methods. Further efforts are needed to raise user awareness and trust in order to promote the application and popularization of blockchain payments.
Challenge 2: Regulatory Compliance
The uncertainty of the regulatory environment is also a major challenge for blockchain payments in Taiwan. Currently, the regulation of blockchain payments in Taiwan is relatively unclear, lacking clear regulatory frameworks and norms. This leads to legal risks and uncertainties for businesses engaged in related activities, which in turn hinders the further development of blockchain payments.
Blockchain payments are visible in countries like El Salvador and Turkey because they have government support. Cai Yi-Ting pointed out that “El Salvador has achieved such development because Bitcoin is their legal tender.” He emphasized that “if we want blockchain payments to be widely adopted in Taiwan, we will still need government support. With government support, it should quickly become a reality.”
Cai Yi-Ting further provided an example. In the past, most people were not accustomed to asking for receipts from merchants. However, when receipts could be used for prize redemption, people started paying attention to whether the merchants had missed issuing receipts. Later, in order to reduce paper waste, receipts were changed to electronic receipts, and special prizes were introduced for electronic receipts, encouraging people to bind their transportation devices.
“With government support, the popularity will gradually expand. Although it is not possible to see a hundredfold increase in users overnight, over time, it will become part of people’s lives.”
Challenge 3: Technical Issues
As blockchain technology is still under continuous development and improvement, it will take time to bridge the gap between traditional finance and Web3 finance. For businesses, adopting new payment methods means that everyone, from store managers to frontline employees, must understand the specific operation methods and be aware of the potential issues and troubleshooting methods that may arise.
For businesses, this also means significant training costs, and currently, adopting blockchain payments does not bring in a large volume of customers. Therefore, most businesses still maintain a wait-and-see attitude towards blockchain payments.
Taiwan already has a diverse range of payment methods, especially with different payment QR code specifications that are not interoperable. However, efforts are being made to consolidate them into a single “TWQR” code, allowing users to scan the same “TWQR” code for payment regardless of the payment app they are using. Although blockchain payments do not have a large user base or widespread usage channels at present, with more policy support in the future, it could gradually become popular and provide consumers with more diverse and tailored payment options.
Proofread by: Gao Jingyuan