Exploring the CyberMiles ecosystem: Payments in the digital currency age

You may be thinking, What does this all have to do with digital payments? Simply put, developing countries with young, fast-growing populations and economies are ripe to adopt transformative technology, including blockchain and cryptocurrency. A Mobile Millennium Many developing countries lack sophisticated financial markets or infrastructure, making easy access to capital unavailable to businesses and consumers who, in turn, rely mainly on a cash-based (or even barter-based) system for everyday commercial and peer-to-peer transactions. Being untethered to conventional payment methods (credit and debit cards, for example), and less entrenched in the way things are done (such as carrying a wallet or a purse, as is prevalent in the western world), also opens up interesting — and potentially lucrative — opportunities. The same goes for mobile technology. Recent reports and news headlines say it all: Signs point to the developing world skipping past the eras of landlines and desktop computers and going straight to mobile (source: UNICEF) Developing world hits 98.7 percent mobile phone adoption (source: The Register) Today, more people have access to mobile phones than to electricity or clean water — and it’s making a difference in the fight against global poverty (source: USGIC) The latter is especially revealing. In 2000, only four percent of people living in low- and middle-income countries had access to mobile phones. By 2015, that number had risen to well over 90 percent. Even in sub-Saharan Africa (where, incidentally, D.R. Congo, Ethiopia, and Nigeria are located), there now are more than 76 mobile cellular subscriptions for every 100 people. The Sky’s the Limit While last year 30 million people ditched the landline, an additional 200 million came online — adding to the burgeoning (yet already massive), global customer pool for digital payment products and services. This has led to some powerful declarations from the crypto community. Just this week, the CEO of Coinbase predicted, per Bloomberg, that within the next five years, we shall see a wave organic adoption of cryptocurrencies. This is notable given that 40 percent of the world’s Internet users (and growing) have made purchases online — more than a billion people. Factoring in the average online shopping cart abandonment rate of nearly 70 percent, and the potential of blockchain to facilitate better/more conversion gets interesting. “The payment space is huge,” Ryan Taylor, CEO of Dash, said at this summer’s BCI Summit, where CyberMiles addressed the Tokenization of Commodities. “When you think about micro payments, think about the Internet, which drastically reduced the cost of information transmission.” As a result, Taylor added, consumers today have access to real-time information — and far more of it. Pay as You Consume “We haven’t even dreamed up all of the possibilities for micro payments.” Taylor said. “When you reduce the cost of transactions, just as you consume the cost of information, it opens up a world of possibilities — new areas of opportunity for business.” According to Kent Yan, CEO of TraDove, micro payments will work beautifully on the blockchain. This is particularly the case in developing countries where there aren’t entrenched financial systems. Consider cross-border remittances. While the current system is too expensive — and too slow — the typical action of sending a wire transfer internationally is both omnipresent and distributed, boding well for blockchain adoption. Yan predicts that the groundswell of support for more efficient, less expensive money movement methods will come from the user side. But it’s more than just straight cost savings. Two-sided (read: P2P/C2C) marketplaces in particular can benefit, namely from streamlined processing of payments for everyday transactions. Here’s how it works today: Take credit cards companies like Visa and MasterCard — the leading financial “middlemen” between a buyer and a seller. As Merchant Maverick explains, they act as associations, creating credit cards that hundreds and hundreds of millions of consumers use daily for all kinds of purchases. Meanwhile, banks such as Chase, Citi, and Wells Fargo, are commonly in league with them, issuing credit cards cooperatively. (American Express and Discover compete as associations in a different way, assuming the role of a bank and, in turn, developing and issuing their own cards.) Add to this arrangement credit card processors, which act as messengers between sellers and these associations; merchant account providers, which manage the backend; and payment gateways, which route the actual transactions at the point of purchase, and that makes for a time-consuming (and costly) third-party matrix. To that end, a handful of pain points that blockchain can address emerge: Transactional (and flat) fees High charge-back rates Hyperinflation (in countries like Venezuela, another situation altogether) Accounting for these fees and rates, often their associated costs get passed on to consumers (and in certain industries — gambling sites, porn sites, etc. — from dishonest consumers to honest consumers, Taylor noted). Now imagine that cost savings could be passed on instead.