Blockchain-enabled Payment Flows: A Payments Company Reviews its Strategy

Blockchain technology presents a tantalizing opportunity for the payments industry, promising advantages of transparency, speed, and automation. Heavy investment in web3 companies—including tens of billions in cumulative annual equity funding—has created a cycle of innovation but also regulatory uncertainty, making it hard for executives to build a strategy.

One payments company asked us to review the blockchain ecosystem, analyze potential disruptions, and recommend ways to help its business thrive. We delivered to PaymentCo* a focused strategy review, including a multiyear scenario model for blockchain-enabled payment flows, identifying the most attractive opportunities for it to pursue and how to manage uncertainty

Blockchain’s impact on payments: the case for change

Our analysis estimated the potential impact of blockchain on traditional payment flows. We laid out the ways blockchain technology threatens to disrupt important use cases in payments, such as wholesale payments or remittances; reasons for this include increased transaction speed, lower cost, enriched data, and the option to make payments programmable.

We also profiled a number of emerging blockchain-native ecosystems, including tokenization of real world assets (RWA), central bank digital currencies (CBDC) non-fungible tokens (NFTs), loyalty tokens, decentralized finance (DeFi), and crypto trading. We defined the growth drivers for each and how these blockchain-enabled segments will link up to traditional payment services (for example, fiat on-ramps and off-ramps).

We also conducted in-depth primary research into the current pain points across the payments value chain, both for native blockchain systems and traditional payments. We detailed the operational gaps that would need filling if PaymentCo were to implement blockchain today—for instance, a new set of reporting structures, or the integration of certain information sources into its IT infrastructure.  

A flexible roadmap for blockchain participation

Our work culminated in an in-depth review of PaymentCo’s strategy for blockchain technology, including the implications it would have for the company’s operating model, governance, and IT infrastructure. The multiyear, flexible roadmap spelled out priority roles and promising business models, as well as existing limitations and pain points. We also delivered a detailed list of potential partners across blockchain subcategories.

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