From Transactions to Payments

Transcript

[music] We're going to get started with our next talk. For this one, I'd like to bring on Pedro from Wallet Connect. He's the founder of Wallet Connect. And a lot of you know W connect as the thing that you use to connect your wallet for mobile apps and and MetaMask and any other web3 wallet on your desktop. But there's been a big evolution of how we think wallets are evolving and going from just transactions to actually managing and facilitating payments. So, can I tell you all about the opportunity and the transition and just everything they're excited about? Please welcome Edra on stage.

[applause] >> Thank you. Well, that was a very good presentation. He basically stole my first two slides. Uh, so you already know about Wall Connect. You already know who I am. So I will tell you a little bit more about the journey in general as a crypto industry and where we're actually heading and how wallet connect is going to play a role in that. And one thing that is very apparent is that well uh crypto has tried to be a lot of things like we've done identity, we've done social media, we've done games, we've done a lot of things but there's few things we really found product market fit and they're all related to finance specifically tokenization settlement and overall just more efficient way of money movement.

But when you think about it like this was all designed because everyone was just building infrastructure like our customers so to speak were developers. We were trying to build standards more interpoling. It was all about making infrastructure better for this new form of finance or new form of money movement. But we didn't really solve the thing that it tried to solve at the beginning. Like Bitcoin was always about payments. It says right there at the abstract, allow online payments to send directly from one party to another. And that thing actually wasn't really solved. And I think it's really important to distinguish here payments from transactions because payments is more complex than we think. Like we built

something that is infrastructure for money movement. We can transact funds from A to B. But when you think about payments is a completely different problem because transactions are very technical objects like you're basically identifying how you're going to move funds from A to B, but payments live in a context of products and services and two parties actually having an interaction where they decide to move that money. And also when you use blockchain, the number one thing that people would always talk about for years was about user education and how we have to understand how blockchain works. But realistically, we've seen that that's not the problem that we're solving here.

We're solving self-custody. We're solving financial freedom. We're trying to make the financial world better in a global and more accessible way. Transactions solve that, but they're still quite complex. And payments are not about that. Payments are about two parties finding consent over exchanging products and services for that transaction. So how do you give consent over this transaction? Actually this is a solved problem. We don't have to reinvent the wheel. Like if you anyone has worked in payments or anyone has learned about how Visa and Mastercard work, it comes into three steps.

Authorization, clearing and settlement. And funny enough, transactions are the settlement piece. It's actually at the end. So we actually put the carriage in front of the horse. We tried to fix one thing but we actually didn't fix the first things. And the first thing is like authorization. Can the merchant accept these funds? Not just because can the merchant accept these funds because it's technologically possible and we have compatible between my wallet and your device. That's what wallet connect does. But is there the regulation, the rules and the risk assessment in place for me to understand that this is a viable transaction for us to make. And then after you actually pass authorization, you actually have the clearing aspect. All of the parties are

involved. Usually there's a payment provider. No one actually accepts payments themselves. Like there's no like entity that is just taking payments one by one. There's a big payment provider that abstracts all of that and they also take a fee on that. So you then have to split the fee. You have to understand who actually gets paid for providing the service and you also have to understand how you route these payments. And finally once you've gone through the authorization, the clearing and the settlement, now you actually have the actual part where transactions come in. You actually move the funds into the settlement. And usually this actually might happen in a later stage.

This doesn't just happen instantly. Fortunately for blockchain, it is almost instant, but settlement could happen even 7 days after. And that's why you sometimes find yourselves in a situation where you're renting a car and they say your deposit is going to come 7 days after because settlement is not a payment. Like the transaction and the payment are completely different things. So now knowing the complexity, let's add more complexity on that. There's actually two ways of actually paying someone. Like for example in Europe it's quite common you actually have option to pay with the bank or even pay with a third party service that actually gives you a request to pay. This actually means that you are putting a access

point where you're saying send the money here and then our transaction will be completed. You're not actually pulling the funds when you use a car payment. You're actually pulling the funds because you're not initiating the transaction. You don't go to an e-commerce website and then you go to your bank and you actually press I'm going to send money to this person. They are actually pulling the funds directly with the pre-authorization from your bank that they can do so. And this is why pull payments are more popular compared to push payments where if you think about it, that's how blockchains work today. you actually redirect the user into the bank or the wallet and they initiate the transaction into the

application or into the merchant. But in a more traditional way with card payments, you actually do a pull payment. You already have this pre-authorization where you actually have someone pull the funds from your bank account. So this is why pull has a big win. It has a big win because first you don't have to switch contexts. You also don't have this moment in time where you have completed an exchange of products and services, but there's a window of time where you don't know if the money is going to move because you actually are still going into this other place to push the payment. You also reduce the merchant risk because technically what if they actually send you the products and you never pay. You

also have the uh problem with escros like a lot of times these push payments what they do is they pull all the funds into one place before the actual products and services are paid and then they actually process the transaction and we also don't have the ability to make it very instant. Uh the good thing about pull payments is because we can run all of that authorization, all of that clearing and then we can actually handle the settlement. And with push payments, that's not actually true because there's always this lag between you exchanging products and services and actually paying. So this is obviously a big problem, but then you have all of the blockchain problems. So now we're not talking about the original vision of

Bitcoin. We're talking about all the layer 2s, all of the stable coins. On top of all of that, merchants don't want to be uh handling all of these payments. And it gets really complex especially because even these stable coins don't all work the same way. Like some of them would use standards like ERC 30009 where you can actually sign an authorization saying in the future you can move funds of this amount or you can use a permit too which allows you to move an allowance of certain amount of funds or you can even use like Solana delegations which work completely different from EVM. merchants, they only want to receive their currency. If they accept euros, they care about euros. They don't care about the 10 different versions of

euros that exist on stable coins. They don't care about the 10 different versions of blockchains that exist. So, with wallet connect, we're trying to solve all of these problems for payments such that merchants can really accept crypto. having the authorization, the clearing, the settlement, having a pull mechanism instead of a push mechanism and have one single new integration that abstracts all these tokens and all of these chains. And the reason this actually is very powerful is because Wallconnect for eight years has been building what I would say is the most universal QR code in existence in crypto. Now we can take advantage of that growth, have all of this large wallet network that already accepts our QR code and having it available across

the merchants. The merchants, what do they get? They get to charge in their currency, whether that's euros, dollars, or any other national currency they accept. They get to not understand how all of these blockchains work. They get one QR code that all of the wallets accept. And they can do this both in person and online. Why does the merchant would want to do this? They already have card payments. Why would they prefer to do this? Well, like I said, a settlement for card payments can last up to 7 days. In this case, with stable coins, we're talking about 10 20 seconds depending on the blockchain. We also have much lower fees. Card payment networks can go as high as 3% in fees depending on the

country. And it depends if there's crossjurisdiction money movement because if you have someone paying in US from US, it's very different from someone from Europe paying in US. You also have access to new customers because some people might not be able to pay in the same card network that you did. Like if you actually see a lot of Visa and Mastercard, uh Japanese and Chinese users didn't have Visa and Mastercard for a lot of years. So they couldn't get access to that. And with stable coins, we're basically opening up to the whole world. And one thing that merchants really would like is have zero charge in disputes. This might not be a common uh knowledge, but merchants actually have this big problem where they serve

products and services and someone would make a false dispute and the card networks want to make consumers happy. So they always accept those disputes. So why would users want to have better payments with stable coins? Well, first of all, we don't make them download a Waknik app. Just so you know, there's no such thing as a Waknik app, and there will never be a Waknick app. So, if you see it in the Apple Store or Google Play, it's a scam. Do not download it. You use the favorite wallet that you have. I don't care if it's a cryptonative wallet or a Neo Bank wallet, if it's a custodial or a self-custodial, wallet connect will always work because the whole purpose of wallet connect is to be a network of wallets. You can also use your preferred

tokens, stable coins or chains. So the merchant will receive their euros, whether that's in stable coin or in fiat, but you can pay in USDC. You can even pay in Ethereum if you want. So you as a consumer have the option to hold the assets that you prefer in the wallet that you prefer in the chain that you prefer. And of course, one of the things that may be common in US but not so much in Europe is that we have a cashback program. Yes, in US you're very used to having like 5% 3% 4%. Uh well connect can offer globally 2% cash back from the get-go and the fast confirmation and clarity which I believe is something that comes with stable coins. We just

make sure that this is available through a payments mechanism that is able for you to pay in a coffee shop or an e-commerce website if you want to buy a ticket for a flight. I think that payments is really the best way for us to actually get mainstream adoption. Crypto has really revolutionized finance. That meant that there was a lot of trading. There was a lot of tokenization. But that doesn't really capture the broader audience. Not everyone is speculating. Not everyone wants to trade. Not everyone is in crypto because they just want a better price in the chart. They want just a better product. like they want to use assets everywhere. They can travel. They can just use it. And payments is

something that is very relatable to everyone from someone who's very young, someone who's very old, someone who's very onlinebased or in person. Payments really solves a problem for everyone in the world. And it really provides this financial experience that the developed countries like Europe and US can have in a global way and wallet connect does this in a way that has been always familiar. We provide SDKs to our wallet developers. We provide SDKs to the payment companies. And for merchants and users, all you need to know is about the QR codes, the beautiful QR code that gives you confidence that it will process the payment that you want in the way that you want and in a way that is accessible to everyone. And I would like

to include a little piece of code here just to understand how little we're actually asking for people to actually change. It's the same QR code with a different URI in the QR code. and you can detect whether you're connecting to DeFi versus processing and payment. And this is already available today and across all of our wallets. Thank you so much. [applause] >> [music]