Blockchain Payments - December 2022

• Public-Private

Partnerships On

The Rise
P. 10

• Wholesale

Improvements

To Cross-Border

Payments
P. 14

• Leading

Blockchain Uses

For Governments

And Corporations
P. 20

• How

Interoperability

Is Supercharging

Adoption
P. 22

December 2022

Blockchain Payments Tracker® Series

Why Public-Private

Collaboration Is Key

To Blockchain Adoption

OCTOBER/NOVEMBER 2022
Blockchain Payments

Tracker® Series

Read the previous edition

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What’s Inside

04 Public-Private Collaboration: The Core Of CBDC

Success
Central banks will need to exploit private sector expertise
for successful CBDC implementation, benefiting the pri-
vate sector in return.

10 Public-Private Partnerships On The Rise

As governments explore blockchain technology uses,

public-private partnerships are playing a pivotal role.

14 Bringing Improvements To Cross-Border

Payments
Wholesale CBDCs promise faster cross-border payments
and innovation.

20 Leading Blockchain Uses For Governments And

Corporations
Payment acceptance is the leading use case for govern-
ments exploring blockchain technology, but other use
cases are not far behind.

22 An Insider Explains How Interoperability Is

Driving Blockchain Adoption
Anish Jain, CEO of WadzPay, tells PYMNTS how building
interoperability between blockchain and established sys-
tems is fueling the payments industry’s next revolution.

28 Blockchain Titans On The Move

As public-private partnerships shape the coming CBDC
landscape, several entities are already establishing them-
selves as important players.

30 Global Blockchain Technology Market Projected

At $31B By 2027
Following significant growth since 2020, the global block-
chain technology market is expected to grow more than 10
times in value by 2027.

32 About

Information on PYMNTS and Algorand

Acknowledgment
The Blockchain Payments Tracker® Series is produced in collaboration
with Algorand, and PYMNTS is grateful for the company’s support and
insight. PYMNTS retains full editorial control over the following findings,
methodology and data analysis.

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Need To Know

Public-Private

Collaboration:

The Core Of CBDC

Success

Private entities can prove essential to the
success of CBDCs by offering expertise in
the following areas:

The International Monetary Fund has identified central
bank digital currencies (CBDCs) as more efficient alterna-
tives to physical cash that promise to lower transaction
costs, promote financial inclusion, limit illicit activity and
improve the functioning of monetary policy. At the same
time, public-private partnerships are essential to fully
realizing that potential.

The private sector brings a significant amount of knowl-
edge, expertise and experience to CBDCs, all of which can
benefit the public sector greatly. Through such partner-
ships, governments and central banks not only can improve
the safety and security of CBDCs but also facilitate adop-
tion and meet intended goals.

Consumer education and adoption
strategies

End-user interface and experience design
for CBDC accessibility and usability

Customer service and account
management

Customer data management and privacy

Cybersecurity, technical resilience and
risk management

Fraud and illicit activity detection

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90%

of the world’s

central banks are

implementing

CBDC projects.

Cash

usage

declined by approximately

one-third in Europe

between 2014 and 2021.

14%

of United States survey

respondents hold digital

assets as part of their

financial portfolios.

Need To Know

The transition to digital currencies is already

occurring, according to a recent report.

The role of commercial

banks in CBDC

development

Commercial banks possess a wealth of knowledge and
experience when it comes to customer onboarding,
fraud detection and data protection. This makes them
good partners for central banks seeking to implement
or pilot CBDCs, particularly at the retail level.

It is also likely that a CBDC will, by its very nature,
disrupt the traditional banking sector and spur new
financial services innovation. To minimize the risk of
bank disintermediation, central banks may work directly
with the private sector to ensure that all relevant play-
ers can contribute to CBDC development.

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Need To Know

Opening new doors

with CBDCs

CBDCs can also unlock new opportunities for the private sector. By
transforming currency into what amounts to a platform, CBDCs can
enable banks and payment providers to offer solutions not just to
their customers but also to every entity and consumer using a CBDC.

In a world of CBDCs, financial institutions (FIs) will act as facilitators
enabling wholesale payments while also serving as intermediaries
between central banks and consumers for retail transactions. As FIs
explore the full potential of CBDC-related products and services,
the industry will likely see increased innovation and competition as
well. CBDCs are a tool/platform that private entities can leverage to
improve existing business models and create new ones.

Many multinational

businesses are already

deeply engaged with

blockchain technology.

84% of surveyed

businesses operating in

10 or more countries use

blockchain networks.

56% of surveyed

multinational businesses

use at least one

blockchain network.

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News And Trends

Public-Private

Partnerships On

The Rise

In response to President Joe Biden’s Executive Order on
Ensuring Responsible Development of Digital Assets, the
U.S. Department of the Treasury and other federal entities
recently issued a series of reports looking at the var-
ied benefits of payments innovation. The reports outline
interoperability challenges, privacy-enhancing technologies
and the prospect of a comprehensive federal framework
for nonbank payment providers.

The reports determined that the development of a U.S.
CBDC would be in the national interest and that instant
payments usage should be encouraged to support a more
competitive, efficient and inclusive payments environ-
ment. The reports also emphasized regulatory protections
that permit responsible innovation and improvement of
cross-border payments.

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News And Trends

Value of

cryptocurrencies

acquired in Africa in

fiscal year 2021

Growth of African
cryptocurrency use
in fiscal year 2021

Israel exploring

government blockchain

bonds

A new public-private partnership between the Israeli Ministry
of Finance and the Tel Aviv Stock Exchange (TASE) plans to
issue government bonds using blockchain technology. The
bonds will be issued on a dedicated blockchain developed by
the TASE with partners, and the initial proof of concept will
involve a number of foreign and local banks in the issuing and
digitization of state bonds.

Dubbed Eden, the project is meant to simplify the issuance
of government debt with tokenization and smart contracts.
In addition to speeding up the process, the Israeli govern-
ment hopes to reduce costs and mitigate risk.

$105.6B

1,200%

Public-private partnerships push

African blockchain adoption

The devaluation of African fiat currencies has
already driven interest in cryptocurrencies as
alternative stores of value, but public-private
partnerships are helping to speed up adoption
as blockchain growth on the continent exceeds
many predictions. Even with a patchwork of
local regulations, interest in cryptocurrency
is higher than anywhere else in the world,
and Kenya, Nigeria, South Africa and Tanzania
all rank in the top 20 on the Global Crypto
Adoption Index.

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PYMNTS Intelligence

Bringing Wholesale

Improvements

To Cross-Border

Payments
As central banks roll out CBDCs for both wholesale and retail
use cases, public-private partnerships are expected to play a
pivotal role. This is especially true for cross-border payments,
where wholesale CBDCs are anticipated to improve transaction
efficiency and security. Public-private partnerships are seen
as critical for interoperability among wholesale CBDC systems.

The multi-CBDC platform mBridge, for example, uses block-
chain created specifically for cross-border transactions. For
this platform, the Bank for International Settlements is collab-
orating with central banking authorities in China, Hong Kong,
Thailand and the United Arab Emirates to support real-time,
peer-to-peer cross-border transactions. This public-private
partnership has enabled a modular system that satisfies the
regulatory needs of various jurisdictions.

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PYMNTS Intelligence

$24 trillion

Annual cross border wholesale
payments made by corporations
globally

$120 billion

Estimated transaction costs
corporations incur that wholesale
CBDCs could eliminate

Wholesale CBDCs could lend significant efficiency

improvements to cross-border interbank transfers.

Making a smaller world with wholesale

CBDCs

The benefits of

wholesale CBDCs

While many are becoming familiar with the concept of CBDCs
as central banks explore the potential of digital assets, an
understanding of the difference between retail and whole-
sale varieties remains less mainstream. Retail CBDCs are
transactional, government-backed digital currencies used by
consumers and businesses, and they can be either token- or
account-based.

Wholesale CBDCs are intended for interbank transfers and set-
tlements, with accounts available only to member banks. These
may be simpler to launch than retail CBDCs due to their limited
impact on individual consumers and the number of success-
ful pilot programs already in place. In the absence of real-time
payment rails, wholesale CBDCs can help countries leapfrog
intermediary steps toward a more modern banking system.

CBDCs offer a number of benefits in cross-border transactions. With
the ability to complete transactions in real time and at any time, a
full-scale multi-CBDC network enabling wholesale payments would
greatly improve the efficiency of global cross-border payments.
Additionally, such a network could save corporations more than $100
billion annually in transaction fees while also adding transparency
and reducing transaction times.

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PYMNTS Intelligence

The give-and-take

of public-private

Among countries that have launched or piloted CBDC solu-
tions, public-private partnerships are common. Private entities
are able to enhance the CBDC ecosystem by bringing specific
expertise and targeted knowledge. This permits central banks
to focus on issuance while exploiting the competencies that
private firms have already invested in developing.

The most obvious benefit of partnering with the private sec-
tor comes in implementation, but private sector expertise is
also essential at the development phase as standards are
created and tech stacks are formulated. Governments are
also able to concentrate on monitoring and supervision while
private sector partners accelerate compliant innovation.

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Chart Of The Month

Most important financial services for
corporate and government customers

Source: PYMNTS

Cryptocurrency, Blockchain and Cross-Border Payments,

November 2021

N = 500: Complete responses, fielded April 2021

Leading Blockchain

Uses For

Governments And

Corporations

As governments and corporations expand their use
of blockchain technology, payment acceptance and
access to cryptocurrency are at the top of use cases
that banks and FinTechs see these clients needing. At
the same time, trade finance, employer services and
treasury services are not far behind, as almost 75%
of FIs look to offer commercial blockchain solutions.

43.7%

57.5%

42.5%
26.4%
23.0%

41.4%

28.7%

19.5%

35.6%

18.4%

31.0%

59.1%

61.4%
52.7%

40.0%

37.7%

42.7%

37.7%
34.1%

36.4%

19.1%

23.2%

69.2%

63.9%
59.4%
48.9%

47.4%

43.6%
43.6%
43.6%
36.8%

19.5%

18.0%

• Payment acceptance
• Access to cryptocurrency
• Access to public blockchain networks
• Fixed asset requirement financing
• Commercial services
• Trade finance
• Employer services
• Treasury services
• Business loans/lines of credit
• Access to private blockchain networks
• Access to blockchain for smart

contracts

Bank

FinTech

Sample

Highest

Lowest

Share of banks and FinTechs that consider the services below to be very or extremely

important to these clients

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We are building

technology that connects

blockchain into the

traditional and existing

payment ecosystem

globally, so the adoption

becomes far easier and

far faster than building

something from scratch.

ANISH JAIN

CEO

Insider POV

How Interoperability

Is Fueling Blockchain

Adoption

Anish Jain, CEO of blockchain-based
payment ecosystem WadzPay, tells PYMNTS
how the marriage of blockchain innovation
with established systems is giving rise to the
next revolution in the payments industry.

Innovation is best supported by a firm foundation in the
traditional, according to Anish Jain, CEO of WadzPay. With
more than 15 years’ experience at Mastercard and American
Express, Jain recognized early on the potential for block-
chain to revolutionize the payments industry by enabling
faster payments, better security and a lower-cost alterna-
tive that reduces barriers to financial inclusion. Rome was
not built in a day, however, so any revolutionary payments
system must be interoperable with the current one.

“We are trying to harness [blockchain’s benefits] in the
technology that we are building. What we are enabling at
the same time is not shaking the entire boat or the entire
payment ecosystem.”

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Payments for everyday goods
and services

Collecting taxes/disbursing
benefits

Reducing barriers to financial
inclusion

Cross-border payments

Uses for CBDCs

Insider POV

Founded in 2018 in Singapore, WadzPay works with international
payments processors and banks to enable digital and asset-based
transaction processing and settlement. Interoperability is twofold,
Jain explained. WadzPay connects to a bank’s mainframe ecosys-
tem and becomes the default blockchain provider. This allows the FI
to tap into any blockchain technology that currently exists or might
emerge in the future. The other interoperability it enables is between
blockchains. The WadzPay chain has the ability to jump between dif-
ferent blockchain protocols and process transactions based on a
specific FI’s or customer’s needs.

“The beauty of the WadzPay ecosystem is it connects not just into
one bank or one market. It’s a global system, which then gives access
to different markets as well.”

That access is where WadzPay is gaining traction in multiple markets.
Jain said that while central banks tend to mistrust private institu-
tions, they are learning — fast. WadzPay is establishing its roots
through a variety of programs with public institutions as well as
commercial banks, payment service providers and large corporates,
and the discussions have been very encouraging. What is also help-
ing is the emerging regulatory framework. Jain said that WadzPay
is pro-regulations, and wherever regulations are emerging, they are
helping to drive its business.

Source: Wadzpay. Governments. Central Bank Digital

Currencies (CBDCs). https://wadzpay.com/business/

governments. Accessed November 2022.

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Insider POV

“We are getting regulated in certain markets through the central
bank, which also then gives us a lot more credibility when work-
ing with public institutions. [A state of] ‘no regulation’ is always bad.
It creates uncertainty [and] a sense of ‘We don’t know what we
should do.’”

As a result of this cooperation, WadzPay’s presence is strong in Asia,
which has taken a leading regulatory role in blockchain, as well as the
Middle East and Africa. Already, Jain said, the landscape is changing.

“Last year, when we set up our Middle East operation, our early cus-
tomers were like, ‘Why are you here?’ Because this is something very
new: This is exotic. So we were more of a ‘nice-to-have’ product that
a financial institution might offer. But today, because the market has
changed, we are becoming a must-have.”

Jain said one of the advantages of being the first mover in an industry
is gaining perspective on how the market will move in times to come.
Global adoption of blockchain is looking more and more possible.

“As a company, we are very relevant in the Middle East, in Africa
and in Asia. Our 2023 objective is to become relevant in the Western
Hemisphere. Blockchain is a beautiful technology, and I would love
to see it getting more adopted in the mainstream.”

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The Bank for International Settlements is involved in multiple
public-private partnerships globally, including Project Rosalind
with the Bank of England and other commercial banks, as well
as Project Dynamo with the Hong Kong Monetary Authority.

The blockchain technology company was recently selected to
provide the public blockchain that will underpin a new digital
guarantees platform in Italy. Algorand will work with the Bank
of Italy and 30 other FIs to enable the use of blockchain tech-
nology for bank and insurance guarantees.

Bit2Me, Spain’s largest crypto
exchange, has received an esti-
mated investment of $29 million
from the country’s largest tele-
com, Telefónica. Bit2Me also

recently launched an applica-

tion programming interface to

enable banks to offer crypto

services.

Companies To Watch

Blockchain Titans

On The Move

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What’s Next

Global Blockchain

Technology Market

Projected At $31B

By 2027

The global blockchain technology market, including
both public and private segments, has experienced
wild growth since the onset of the pandemic, and that
is only expected to continue. Valued at an estimated
$2.5 billion in 2020, the global market is projected to
grow to $30.7 billion by 2027, marking a compound
annual growth rate (CAGR) of 43%. The public seg-
ment alone is expected to be valued at $21.5 billion
by 2027 for a CAGR of almost 45%.

SILVIO MICALI

FOUNDER

Through [our]

technology, we can

help solve for many

critical issues facing

financial institutions

and governments

across the world today,

bringing opportunity

and inclusion to

communities

in need

everywhere.

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Disclaimer

PYMNTS is where the best minds and the best content meet
on the web to learn about “What’s Next” in payments and
commerce. Our interactive platform is reinventing the way
in which companies in payments share relevant information
about the initiatives that shape the future of this dynamic
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Algorand is transforming economic models and economies
of all kinds. Founded by Turing Award–winning cryptographer
Silvio Micali, Algorand’s high–performing Layer-1 blockchain
is unparalleled for bringing fast, frictionless and inclusive
technologies to everyone. Algorand is reshaping every indus-
try — from TradFi and DeFi to new creator economies and
beyond. With an extraordinary commitment to interopera-
bility and consistent delivery, our sustainable technology
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organizations, the Algorand ecosystem is transforming the
next generation of financial products, protocols and exchange
of value. For more information, visit www.algorand.com.

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