Web3 payments are seeking to completely revolutionize the internet and how it’s run. How we send and receive money is no exception to Web3’s ambitions.

You probably know yourself. Buying things on the internet or sending money to friends can be a long and difficult process, often with too many hoops to jump through.

But can Web3 really revolutionize the payment space of the internet? And do any Web3 payment services already exist?

What is Web3?

But, first, what really is Web3? 

As a quick summary, Web3 is a set of propositions for how to reform the internet, in an attempt to make it more democratic and accessible. It seeks to combat the power held by just a few large technology companies and their infrastructure, by using blockchain as an effective way to run the internet.

All information and data would be stored in a decentralized location, and all processes verified by the decentralized network rather than private companies. Currency and information would be sent without needing to go through a third-party.

Why is Web3 the future of payments?

Web3 payments allow money to be exchanged without the need for centralized intermediary companies, in line with the ideas of privacy and democratization. Money can be sent easily, quickly, and anonymously. The exchange is peer-to-peer, meaning that no middle man is required to complete the payment, and removing the need for the infrastructure of big technology companies.

Web3 will cut the bureaucracy associated with finance and money. People will be able to send money without having to register for financial services or give permission for companies to access their personal and financial data. The fact that Web3 data is encrypted also means that purchasers on the internet can be sure that their personal information is secure and their transaction details cannot be accessed.

Web3 payments could also expand the number of currencies that people can exchange and hold, widening financial opportunities beyond simply fiat currencies. The possibility to pay in crypto or other currencies with ease will make investing and access to the financial system more widely available and universal.

The lack of bureaucracy also makes Web3 payments much quicker. While traditional Web2 payments might take days to settle, payments on the blockchain are settled within minutes, or even seconds. International transfers are also much easier under a Web3 payment system, removing the need for complex currency conversions and expensive remittance fees. 

In this sense, Web3 payments are a form of Decentralized Finance (DeFi). They use secure ledgers to process the moving of money, and seek to combat the control of large financial institutions such as banks, which often require fees and the submitting of data in exchange for their services.

Examples of Web3 payments

Ethereum

Ethereum is a decentralized, open-source blockchain. Through the platform, users can engage in frictionless trading of cryptocurrencies, as well as borrowing and lending, without third-party authorization.

The Ethereum platform is not solely restricted to the Ether token, acting as a platform for many other Web3 decentralized applications. All exchanges and payments are peer-to-peer, permissionless, and non-hierarchical.

The platform also allows for the trade and purchase of NFTs. It is an example of one of the platforms most at the forefront of Web3 payment innovation. 

Paypal

In some ways, Web3 innovation will also have to be led by current Web2 technology companies, as these companies already have the capital and infrastructure to adapt and invent.

Paypal has been experimenting with Web3 processes for the past few years. The company is currently researching and seeking to implement blockchain processes into its business model, as well as its own crypto token.

In June 2022, Paypal announced that users would be able to transfer cryptocurrency from their Paypal accounts to other wallets and exchanges. This already opens up the possibility for users to send crypto to each other using Paypal’s services, with further developments on the way in the future.

The hope is that Paypal will further expand the possibility for frictionless exchanges along the blockchain, in a similar way to how it originally revolutionized Web2 payments.

OpeanSea

OpenSea is the largest web3 marketplace, allowing users to buy and sell NFTs and other crypto commodities. 

Users can connect their personal wallet to the OpenSea platform, giving them the possibility to directly buy or sell on the platform. Transactions are completed through direct peer-to-peer payments between buyer and seller, rather than a centralized system.

In line with the ideas of Web3, OpenSea transactions are completed on the blockchain, and international transactions function exactly as local transactions.