B L O C K C H A I N A N D C R Y P T O I N PAY M E N T S

Transforming the
Way Money Moves
A special report from the US Faster
Payments Council and Ripple on
the transformative opportunities of
crypto-enabled payments—and what
leading providers expect next.
 Transforming the Way Money Moves

Foreword from the US Faster Payments Council

The payments ecosystem is evolving quickly and in many different directions. The pace and
breadth of change makes it a challenge to keep up with everything. Digital currencies are
not new, and there are fascinating use cases that have already achieved scale. However, how
digital currencies are perceived and how they might be part of the future state of payments
remains a topic of much interest. Understanding the wide range of use cases and potential
advantages of any new payments technology is important for all ecosystem participants, and
we hope that this paper can help in that regard.

While this paper focuses on digital currencies, it’s important to approach it with the under-
standing that various clearing and settling mechanisms within the ecosystem can operate in
parallel or as part of a broader, holistic solution to complex market needs. An approach that
leverages the best attributes of various payments technologies can expedite innovation and
advance the ultimate end-user utility of the overall payments system.

Cryptocurrencies and, more generally, the mindset of innovation that led to their creation and
growth in the marketplace are exciting for the future of payments. Cryptocurrencies present a
potentially compelling blend of flexibility and utility. They appear well-positioned to solve some
seemingly intractable issues in payments by filling various gaps in payments flows efficiently
and effectively.

This report provides an overview of the use of cryptocurrencies in payments today, insights
from participants in the faster payments ecosystem, and what the future holds for blockchain
and crypto in payments.

Reed Luhtanen
Executive Director
US Faster Payments Council

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

Contents

Introduction 3
Brief Overview of Crypto Use in Payments Today 5
Blockchain and Crypto will Enhance Payments
Speed and Boost Customer Value 7
Crypto’s Most Attractive Feature: Cost Reduction 8
Enterprises Gear Up to Support Crypto Payments 11
Crypto’s Environmental Footprint Gives
Providers Pause 13
Conclusion: Bringing Blockchain to Payments 15

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

01 ———— S EC T I ON

Introduction

Global payments volumes are on the rise, as is both interest in and use of crypto across
industries and use cases. Ripple and the Faster Payments Council (FPC) collaborated on
an inaugural global payments survey to explore these trends among the growing payments
market and crypto expansion. In order to better understand payment provider sentiment and
their adoption of blockchain and crypto for payments, this survey surfaces perspectives on
perceived benefits, future adoption plans, and any potential barriers to growth.

Nearly 300 payments leaders participated in the survey, ranging from Analysts and Directors, to VPs and C-level
Executives. Respondents represent a cross-section of global sectors including retail, fintech, banking, media and
entertainment, and consumer technology from 45 countries.

Among the survey highlights:

• An overwhelming majority of providers see crypto-enabled solutions as key to bringing speed to sluggish
payments markets.
• Lower cost of domestic and international payments is crypto’s primary benefit.
• Few enterprises currently support blockchain-based payments, but it is only a matter of time before more
widespread adoption takes place.
• The pace of broader acceptance hinges on one critical factor: improved regulatory clarity.
• Crypto’s environmental footprint is top of mind; how much it impacts usage remains to be seen.

Read on for additional observations and insights on progress toward crypto-enabled payment flows.

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

02 ———— S EC T I ON

Brief Overview of Crypto Use in

Payments Today
Despite trillions of dollars still moving around the world via an antiquated and
costly payments system1, the promise of blockchain and burgeoning crypto use
cases present one avenue for transformative payment opportunities. As adoption
grows, both providers and customers appear poised to benefit from reduced
process complexity, lower costs, and enhanced transparency.

New research indicates that although global crypto payment transaction volume
is small relative to total payment volume, its long-term growth prospects are
bright. In the US, crypto payment adoption is on the rise, with a forecasted 5.5
million crypto payment users in 2023 (a 350% increase in just three years). As the
figure below shows, of the four primary use cases contributing to crypto payments
growth in the US, remittances are expected to remain the most mature use case,
followed by B2B cross-border payments.2

US Crytocurrency Payment Use Case Maturity, 2023

(Scale of 1-10)

Cross-Border Card Digital

Remittances B2B Payments Payments Payments

Infrastructure

Mainstream
Adoption

Regulatory
Certainty

Interoperability

Acceptable
Level of Risk

Note: *where 1=lowest maturity and 10=highest maturity 1 10

Source: Insider Intelligence, May 2022
i274645

1. https://www.cbinsights.com/research/blockchain-disrupting-banking/
2. https://www.insiderintelligence.com/content/us-crypto-payments

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

Other Ripple research supports these growth trends, showing swelling payment
volumes across small-medium enterprises (SMEs), treasury flows, and remittances.
This further emphasizes the need for change—and global policymakers are taking
note. According to the World Economic Forum, G20 leaders now prioritize
blockchain technology to address problems posed by outdated financial
infrastructure, including boosting stablecoin and digital asset use to create
interoperable, efficient, affordable, and accessible financial systems.3

Encouragingly, leading payment infrastructure providers also embrace the need

for innovation. Last year PayPal announced the ability for users in the US to accept
payments in bitcoin and other mainstream cryptocurrencies.4 And Stripe
incorporated cryptocurrency-based rails (via USDC stablecoin) into its business
payments solution.5 The company points to “open-access global financial rails”
as crucial for burgeoning online economies. Other payment processors including
Worldpay and Checkout.com now support stablecoin payment settlement.

Broader stablecoin adoption for payments can likely be attributed to cost savings:
cross-border payments using a stablecoin is up to 80% less expensive for the
end-user6 compared to traditional remittance operators. That means that for a $500
remittance, the cost of on-chain FX conversion combined with the on/off-ramp
can be transacted for as little as $4.80—much smaller than the average cost of a
remittance which hovers around $20 USD.

Elsewhere, the payments industry is trialing crypto in more novel use cases.
Today, across insurance claims, rewards, rebates, and other disbursements payment
types, US companies generate more than 1.9 billion payments to consumers
annually—and one-third are made by paper check.7 In an effort to help modernize
and streamline this process, blockchain-based providers have targeted the
corporate disbursements use case to pay employees, affiliates, and customers in
a more timely, cost-effective way. This includes everything from insurance claims,
rewards and rebates; to wages, loan disbursements and medical reimbursements.

Market providers recognize a range of use cases and benefits of crypto-enabled

solutions. With growing interest from digitally-native consumers, expect pronounced
shifts in the payments landscape.

3. https://www.weforum.org/agenda/2021/04/
how-blockchain-technology-is-fixing-payments-today-what-comes-next/
4. https://www.pymnts.com/cryptocurrency/2022/psps-are-making-stablecoin-payments-a-reality/
5. https://stripe.com/blog/expanding-global-payouts-with-crypto
6. https://www.circle.com/blog/on-chain-foreign-exchange-and-cross-border-payments
7. https://www.cuinsight.com/five-things-to-know-about-digital-disbursements/

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

03 ———— S EC T I ON

97
Blockchain and Crypto will
Enhance Payments Speed and
Boost Customer Value
Nearly every surveyed leader (97%) believes blockchain technology and
%
cryptocurrency will have a significant or very significant role in enabling faster
payments within the next three years. of respondents believe blockchain
technology and cryptocurrency will
have a significant or very significant
For respondents, blockchain and crypto technology holds particular promise role in enabling faster payments
with respect to transforming cross-border payments. Juniper Research supports within the next three years.
this notion, pointing to blockchain’s potential to significantly increase savings for
financial institutions conducting cross-border transactions—an estimated $10
billion by 2030 thanks to fast, reliable and transparent payments settlement.8
Observers shouldn’t underestimate the transformative opportunity here: Global
cross-border payment flows are expected to reach $156 trillion–driven by a 5%
compound annual growth rate (CAGR).9

Respondents see additional crypto-enabled payments use cases, with over 50%
of surveyed leaders believing that most merchants will accept crypto payments Over 50% of surveyed leaders
within one to three years. Middle East and African leaders appear particularly believe that most merchants will
bullish: 27% believe that they’ll cross this threshold within the next year. Optimism
accept crypto payments within
in these markets may stem from a growing appetite for broader financial access
one to three years.
and inclusion, including other crypto-enabled payment solutions like mobile
payments and Central Bank Digital Currencies (CBDCs).

8. https://www.juniperresearch.com/press/blockchain-facilitate-savings-of-10-bn
9. https://www.ey.com/en_us/banking-capital-markets/how-new-entrants-are-redefining-cross-
border-payments

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

When do you think most merchants (greater than 50%) will accept payment
in cryptocurrencies in your region?

While surveyed leaders don’t universally agree here, growing crypto acceptance
aligns with Ripple’s previous research and sweeping convergence of factors
conducive to adoption–from crypto firms sponsoring football clubs to
state-sponsored CBDC projects as an alternative to SWIFT.

Other applications of crypto and blockchain technology are being explored for
various buying, selling and lending use cases. For example, the California DMV is Credit unions and community
moving auto titles to the blockchain to streamline title transfers, automate manual banks should view money
processes, and provide much needed transparency and traceability to the vehicle movement using blockchain as
lending process.10 an incremental evolution—not a
disruption—that has the potential
While still nascent, the real estate industry is also adopting blockchain and crypto
to lower costs and increase speed
technology, with a growing number of homes being sold as NFTs (Non-Fungible
of settlement [...] with the added
Tokens)11. This opens up a world where a real estate transaction doesn’t involve
benefit of being available
manual underwriting, appraisals, title searches and preparing deeds, and the home
24/7/365.”
buying, selling and rental process can be much more efficient and cost-effective.
Lou Grilli, Sr. Innovation Strategist, PSCU

10. https://www.yahoo.com/now/california-dmv-puts-car-titles-140000450.html
11. https://ripple.com/insights/featured/utility-based-nfts-solving-real-world-problems-in-real-estate/

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

04 ———— S EC T I ON

Crypto’s Most Attractive Feature:

Cost Reduction
The pandemic era infused new urgency around shifts to digital payments. Various
physical limitations and financial insecurities sped up interest in crypto-enabled
and more cost-effective payment offerings.

In the survey, over 50% of respondents believe that lower payments cost–both
domestically and internationally–is crypto’s primary benefit. Nearly 90% of Over 50% of respondents believe
surveyed leaders acknowledge some “cost-improvements related to international that lower payments cost–both
payments” and 75% expect domestic cost benefits.
domestically and internationally–
is crypto’s primary benefit.
In particular, domestic payment providers see crypto as an answer to transaction
and processing fees—which are often up to 4%, per the US Chamber of Commerce.12
Interestingly, while these providers cite lower costs of cross-border payments as
crypto’s primary value proposition, only about half currently provide cross-border
payment services today. One possible reason could be that the exorbitant costs
and inefficiencies of traditional cross-border payments are inhibiting these
businesses from expanding into new markets.

What is the largest benefit of blockchain tech / crypto for payments?

Faster payment resolution and lower cost

12. https://www.uschamber.com/co/run/finance/accepting-cryptocurrency-as-payment
13. https://bowerycap.com/blog/insights/the-future-of-cross-border-payments-with-brendan-berry-ripple

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

6 %
Other research conducted by Ripple (New Value Research, August 2021)
further supports sentiment around the lower cost benefit. When asked what
cryptocurrency can offer their organization, roughly 30% of financial institutions
and 40% of enterprise respondents cited lower costs for both businesses
and consumers.

While lower transaction costs will boost corporate margins, those who push Global average cost of sending $200
savings to end users may outperform with respect to customer acquisition and
The World Bank | June, 2022
retention. Today, the global average cost of a remittance remains a painfully high
6%—double the Sustainable Development Goal targeted by the United Nations.14

By leveraging a digitized
asset you can move funds in
real-time [...] bypassing the
pain and costs associated
with correspondent banking,
in favor of real time
settlement.”13
Brendan Berry, Director of Product
Management, Ripple

14. https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_annex_q222.pdf

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

05 ———— S EC T I ON

Enterprises Gear Up to Support

Crypto Payments
Leaders foresee the new world of payments that crypto opens up—one rid
of pre-funding, high transaction fees, slow settlement times, and opaque
capital flows. While these benefits are clear and the majority of respondents
are considering crypto use (52%), only 17% currently support crypto-
enabled payments.

Why? For payment providers, regulatory clarity remains a primary hurdle to

go-to-market efforts. When given the option for multiple responses, almost
one-third of participants cited regulatory clarity exclusively—indicating no other
perceived barriers to using blockchain for payments.

Which of the following do you view as barriers to your organization using

blockchain technology for payments?

Moreover, for respondents who cited additional adoption barriers, nearly 90%
point to regulatory ambiguity as the main deterrent.

Even the second most cited concern, limited industry acceptance, may be a
corollary of regulatory unease. A Deloitte study of senior retail executives finds
that merchants widely agree that accepting digital currencies offers a competitive
advantage (87%), but more than 50% agreed that regulations must be enacted,
“including national guidance around holding digital assets, clarity about the tax
implications of using digital currencies, and the ability to hold digital currencies in
a bank account.”15

15. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/technology/us-cons-merchant-getting-ready-for-
crypto.pdf

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

While regulatory clarity appears to be the adoption linchpin, the industry is

trending in a positive direction. In the US, President Biden released a first-of-its- We now have leaders in
kind framework for crypto regulation. Highlights include how financial institutions Congress on both sides of
can and should adapt and evolve for better cross-border transactions, as well as
the aisle championing
the benefits of digital currencies like CBDCs and stablecoins to enable a more
efficient, sustainable payments system.
legislative solutions. The
dialogue around crypto is
In addition to regulation, respondents also cite mild concern around technical much more sophisticated
investment. To overcome existing fiat approaches, 20% of surveyed providers than it was two years ago.”
noted a need for “simplified infrastructure capability.”
Susan Friedman, Director of Policy, Ripple

Given enterprises’ practice of converting accepted digital currencies into

fiat, change-over costs to support crypto payments are naturally concerning.
According to research conducted by Ripple and Oliver Wyman, as more financial
institutions and organizations look to incorporate crypto, this reticence may wane
as technology service providers introduce more user-friendly, plug-and-play
solutions—some even boasting compliance-adapted functionalities specific to
states or nations.

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

06 ———— S EC T I ON

Crypto’s Environmental Footprint

Gives Providers Pause
Sentiment around blockchain and sustainability is strong among payments
leaders. Nearly every respondent (98%) acknowledged the environmental impact
associated with blockchain use. Of these, 71% share that low energy consumption
is very important, while 19% note that it is somewhat important. Encouragingly, the
majority of respondents (78%) also cite being very familiar with the difference in
environmental impact between proof-of-work and proof-of-stake protocols—the
latter requiring less computational power and energy usage.

Over 50% of surveyed financial institutions in Ripple’s 2022 New Value Report
viewed sustainability as “important in the context of blockchain usage.” And
when asked about attitudes toward cryptocurrency and sustainability, over 75%
of consumers said they would prefer to buy a cryptocurrency that is sustainable.
Both then and now, concerns surround crypto overreliance on raw computing
power and electricity.

Which of the following best describes your attitude toward crytocurrency and
sustainability (defined here as low enery usage)?

Customer Attitude to Crypto and Sustainability

by percentage

Would only buy sustainable cryptocurrencies

Would strongly prefer to buy sustainable cryptocurrencies

Would prefer to buy sustainable cryptocurrencies

Sustainability is not something I consider when

buying cryptocurrency

Would prefer to buy cryptocurrencies that are

I don’t care

Importantly, the IMF recently probed the energy profiles of payment types, noting
that some crypto assets “can be more energy efficient than much of the current
payment landscape.”16 Increasingly, both policymakers and the public express
concerns about the environmental impacts of money, including traditional fiat
currency. One university study estimates the total annual environmental cost of
the 50 billion US banknotes in circulation to be $12.9 billion.17

16. https://www.imf.org/en/Blogs/Articles/2022/06/16/
how-crypto-and-cbdcs-can-use-less-energy-than-existing-payment-systems
17. https://sites.tufts.edu/digitalplanet/how-green-is-the-greenback-an-analysis-of-the-environmental-
costs-of-cash-in-the-united-states/

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

More recently, the Economic Times noted the potential savings associated with
the digital rupee—a digital currency alternative for the Reserve Bank of India: “For
every Rs 100 note, the cost works out to be about Rs 15-17 rupee (15-17% on each
tender).”18 This includes environmental and operational costs ranging from printing,
distributing, and disposing of soiled notes.

Meaningful crypto use among payment leaders may ultimately rely on digital assets
with more sustainable underlying technology. For example, decentralized assets
which rely on transaction verification methods that consume negligible energy.

Given the bullish sentiment of surveyed leaders, however, environmental hesitations

aren’t expected to derail crypto payment ambitions. But keeping pulse on the While we drive toward innovation, we
intensity of this concern may provide clues as to when crypto payments will go cannot lose focus on other societal
mainstream. In the meantime, questions remain: imperatives—notably, the need to
reduce energy consumption and be
• Will the optics of excessive energy usage inhibit crypto payment innovation? stewards of the environment. Survey
respondents see the potential utility
• Can providers recognize sustainability nuances between blockchains (and
of cryptocurrencies, and are
articulate these successfully to stakeholders)?
appropriately interested in ensuring
• Is familiarity with the environmental impact of certain blockchains enough,
responsible use of the technology
or will additional steps need to be taken to further educate providers on the
that is not detrimental to the planet.”
importance of sustainable payment methods?
Reed Luhtanen, Executive Director,
US Faster Payments Council

18. https://economictimes.indiatimes.com/news/economy/finance/digital-rupee-to-save-costs-of-print-
ing-distributing-and-storing-cash/articleshow/89413532.cms?from=mdr

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

07 ———— C ON C LUS I ON

Bringing Blockchain to Payments

100 %
Payment providers intrinsically see value in blockchain technology. When
asked about the benefits associated with blockchain and crypto in payments,
no respondents cited being unclear on what those are. In particular, an
overwhelming majority of participants noted shifting perspectives with respect
to crypto-enabled payment solutions.

of respondents agree there are

The views make sense. Universally, payments providers are tasked with ensuring benefits of blockchain and crypto
speed, security, transparency, and flexibility within payments strategies. To the in payments
extent that emerging solutions enable this, providers will respond.

The goal of this report is to give industry participants a better understanding of

the state of crypto usage, current sentiment around acceptance and adoption
of crypto-enabled payments, and to highlight the potential transaction-related
improvements crypto introduces. The report also flags concerns—an important
component of understanding what solutions providers must overcome to fulfill
crypto’s promise.

Few argue against the need for transformation in today’s antiquated, often
exclusionary payments markets. Crypto may offer the answer. If so, we expect
forward-thinking payments leaders to lead the way.

Ripple and The Faster Payments Council are working to help shape the future of
payments, and look forward to learning, growing, and building with you. For more,
please visit ripple.com and fasterpaymentscouncil.org.

Copyright © 2023 Ripple. All rights reserved.

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 Transforming the Way Money Moves

Methodology

Ripple and the Faster Payments Council collaborated on a survey sent to over 950
FPC subscribers, representing over 70 primary business lines across 45 countries.
Role types range from analyst to CEO. The number of respondents was n = 281.
Participants were asked to complete 25 questions on topics of blockchain payments
use cases, sustainability, usage barriers and benefits, and digital asset ownership.
Fieldwork for the survey was conducted during the first half of 2022.

About Ripple

Using proven crypto and blockchain technology honed over a decade, Ripple’s
enterprise-grade solutions are faster, more transparent, and more cost-effective
than traditional financial services. Ripple’s customers use these solutions to source
crypto, facilitate instant payments, empower their treasury, engage new audiences,
lower capital requirements, and drive new revenue streams.

Founded in 2012, Ripple’s vision is to enable a world where value moves as

seamlessly as information flows today—an Internet of Value. Ripple is the only
enterprise blockchain company today with products in commercial use. Ripple’s
global payments network includes over 300 customers across 40+ countries and
six continents.

About The Faster Payments Council

The Faster Payments Council (FPC) is an industry-led membership organization

whose vision is a world-class payment system where Americans can safely and
securely pay anyone, anywhere, at any time and with near-immediate funds
availability. By design, the FPC encourages a diverse range of perspectives and is
open to all stakeholders in the US payment system. Guided by principles of fairness,
inclusiveness, flexibility and transparency, the FPC uses collaborative, problem-
solving approaches to resolve the issues that are inhibiting broad faster payments
adoption in this country.

Copyright © 2023 Ripple. All rights reserved.

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