Online payment processing is a must for any business wishing to sell its products and services over the internet. 

In recent years, vendors have begun to expand the scope of choices they offer to their customers when it comes to when, how and even how much they transfer to the merchant at any given time. 

In keeping with this important trend, web3 is now joining the many other offerings now available to today’s customers, looking to provide additional choices to buyers while simultaneously giving merchants a superior and more private way to promote their brand.

What are WEB3 payments?

Unlike other methods in this space, WEB3 is not a particular mechanism or technology whose purpose is to securely accept credit cards or otherwise facilitate the exchange of funds from buyer to seller. 

Instead, WEB3 is a group of proposals designed with the purpose of making the internet and the payments ecosystem more accessible to all. In other words, these guidelines are being set forth to shift the focus away from a few powerful tech giants, enabling the process to become more user-focused and decentralized.

Blockchain technology is what is being proposed to make this happen. Instead of data and other metrics being stored in corporate-owned hubs, the information would be held in a decentralized location, with an objective network put in place to verify all processes. 

Finally, funds would be exchanged without ever needing to make their way through a third-party network.

The current payments space

One of the hallmarks of today’s expanded payment options is their potential for personalization. These methods are designed to fit the preferences of customers as well as the sales techniques and funds exchange infrastructures of the companies that adopt them.

One of the most popular to emerge on the scene in recent years is the usage-based pricing model (UBP). With this configuration, customers pay only for what they actually consume.

On the surface, UBP seems simple and easy to implement. However, in today’s payments status quo, doing so requires businesses to set up separate configurations to capture every customer’s unique data, apply it to contractual agreements and quickly set up an accurate invoice. 

Generating these multiple bills leaves companies, especially those with staff that are unfamiliar with this complex process, more prone to errors and oversights. The result is potential harm to consumer trust as well as to the brand’s reputation as a whole.

How WEB3 is transforming the payments ecosystem

It should go without saying that brands like yours cannot afford to take this type of hit. You need to make every facet of the customer’s checkout experience efficient, transparent and secure. 

Whether you are accepting international payments or are restricting your sales to the domestic arena, you cannot afford to diminish client perceptions of your company and its reputation.

When WEB3 comes into play, all of the corporate behemoths that currently dominate customer payments will be effectively removed from the process. In this newly democratic and uniquely private type of transaction, your customers can be confident that their personal details and payment data are not available to third parties.

Additionally, WEB3 has the potential to broaden the scope of the currencies that shoppers hold and use as forms of payment. After all, blockchains settle in a matter of seconds, contrasted with the several days that Web2 transactions tend to require these days. 

Added to that is the fact that international transfers flow with ease now that they are no longer slowed down by complicated currency conversions and costly transfer fees.

How your payments could work with WEB3

If a customer purchases something from your website today, all of the data that is attached to their credit card is transmitted to every party involved in the process, including your website, the payment processor and the customer’s bank. 

The bank’s job is to verify the customer’s ability to pay to complete the transaction as well as assessing the risk that the transaction represents. From submission to payment acceptance or declination, various data is shared: the cardholder’s identity, the expiration date and CVV, etc. – all to establish trust among the players.

By contrast, a principle known as self-sovereign identity (SSI) is made possible when credential verification happens without the need for centralized identifiers from third-party companies. This simplified and transparent process leads to enhanced trust because individuals retain total control of their privacy and identity from one end of the payment process to the other. 

When vital personal details and sensitive information remain masked from outsiders, a customer is much more likely to place their trust fully in the brand from which they are making a purchase.

Even so, there will be times when the customer needs to verify their identity or some other feature pertaining to themselves such as their age. WEB3 makes both possible through concepts known as selective disclosure and zero-knowledge proof.

In selective disclosure, the user can prove their identity by providing a few attributes without having to disclose the rest. Zero-knowledge proof allows the user to confirm a fact without needing to reveal the actual value of the data by furnishing an encrypted answer.

A payment with WEB3 would look something like this: The customer first requests proof of payment to validate the purchase. In response, the bank issues a verifiable document that contains all necessary payment details but without disclosing any more than necessary. 

The customer stores the proof of payment document in their digital wallet where it is available for use on merchant sites that connect with that wallet. After proof of payment is presented by the customer, the ecommerce site gets in touch with the wallet to verify that the customer’s credentials are valid. 

Throughout, the bank has no knowledge of which merchant website is making the payment inquiry. The user remains in control of every aspect of the process, which occurs more quickly than former WEB2 payments.

Although WEB3 is not in full effect yet, it seems likely that businesses will move toward these decentralized protocols in the next few years. 

Keep this in mind as you examine your current and future payment processing provider, being sure to choose one that offers future-ready decentralized payment solutions and has knowledge of both WEB3 and the most up-to-date compliance and security protocols. 

Doing so will help to ensure that your business is at the forefront of the decentralized payments revolution that is sure to sweep the commercial landscape.