PayFi could soon develop into a major industry given its potential to accelerate the adoption of Web3 through the creation of better financial architecture than what powers Web2.
This financial architecture includes payment gateways, monetizing current Web2 assets which are beyond RWAs, settling cross-border payments faster than ever, and utilising cryptocurrency for payments regarding almost anything that you need in your day to day life.
In this article we will explore 9 such interesting use cases where PayFi could create sustainable and resilient infrastructure for Web3.
Retail Shopping
A major section of people working in the Web3 industry are nowadays getting paid in exclusively cryptocurrencies. Furthermore, there is also a large section of people who are buying and holding cryptocurrencies and are just a step away from using them for their daily purchases.
With the recent developments in PayFi in the last couple of years, there are more than 280 crypto-based payment companies that could bridge this gap.
Please note that the term PayFi is new but the concept has been around since quite a time.
P2P Transfers
P2P transfers were the primary need of developing blockchain technology and was the reason for the creation of Bitcoin. Sixteen years down the line, there has not been much development in terms of a proper P2P payment solution that could replace traditional apps like PayPal.
PayFi could not only help send and receive such P2P payments but also help you track finances, set reminders, split bills, contribute towards house payments, and several other things that traditional finance apps do.
Polygon recently saw a rise of 81% in P2P payments in the last six months post Trump’s win, indicating a growing confidence in crypto.
Online Shopping
There are millions of people who want to directly spend in crypto but are unable to do so because most online shopping platforms do not accept crypto payments. A proper crypto-based payment gateway that provides end-to-end crypto transfer solutions from customer to vendor is the need of the hour.
PayFi could help bridge a gap between these customers and vendors who are ready to adopt crypto but have been unable to do so because of lack of proper infrastructure.
Are you curious about Crypto Debit Cards? Check out how they work.
RWA Purchases
At this stage the entire Web3 industry is quite certain that Real World Assets (RWAs) are going to be the future of traditional finance. However, there has been no RWA-based trading, investing or portfolio managing service for the retail sector.
PayFi dApps could not only help in the trading and settlement of RWA assets, they could also provide custody solutions (both self and via a custodian).
With large players entering the market, crypto custody would be better positioned to help new Web3 users.
Financing Account Receivables
Account receivables are payments which are about to be made to a certain business or individual. In terms of accounting, they are considered as good as money. In traditional finance, these account receivables can be used as collateral to receive ultra-short term loans till the vendor receives the payment.
RWA with the help of PayFi can revolutionize these account receivables by integrating them with DeFi and by acting as an instant monetization service. Since receivables are as good as cash, they can be collateralized to lend crypto loans. Also because these loans are very short term (say 14 days), they are a quick way to earn money.
Cross-Border Settlements
Cross border settlements were one of the first applications of cryptocurrency. Now they are a $600 billion market.
However, till date there has been no definite solution that could send and receive crypto like a payment app such as PayPal or Stripe would do.
Even though wallets can do pretty much everything you need on regular basis such as sending and receiving crypto, yet they cannot keep a track of payments, generate invoices, collect automatic payments, put reminders and perform a lot of other tasks like a traditional payment app would do.
Buy Now, Pay Never
Buy Now and Pay Never is an interesting concept in PayFi where your rewards collected from multiple sources are used to pay for your needs, from shopping to medical bills.
Though the scale of its potential success is unknown, it could still in principle provide a major support to your financial needs.
Financial Inclusion
PayFi being built on Web3, does not require complex financial documents to achieve financial inclusion in areas where the income rate is too low. In such areas, there is a dire need to provide services rather than comply with globally set rules.
A PayFi app could not only help people get paid on time, process faster and cheaper payments, but also help them save in times of abundance and borrow in times of need.
There were some solutions in Africa like Machankura but those applications heavily relied on traditional financial institutions. Web3 being decentralized could help make financial inclusion easier by building peer to peer connections, eliminating middlemen.
User Data Monetization
For those willing to send their user activity online in exchange for rewards, PayFi could easily help them monetize that data. Common examples would include browser data, shopping data, surveys, and opinions on products or services.
Though there are individual applications like Brave Browser in this field, these are mostly working in silos and there is no single platform which rewards a user by monetizing multiple channels.
Therefore there is a need for one unified application which helps you collate your monetization rewards from different platforms or different channels.
