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To date, we have released two installments outlining the crypto payments opportunity: Part I: Why Crypto Payments? and Part II: The Momentum is Building.
This week, we turn to the Architect Partners Crypto Payments Market Map. Much like the traditional payment ecosystem, crypto payments comprise a complex set of interdependent capabilities. Conveying this complexity is challenging. One approach, albeit imperfect, is segmenting this inherent interdependence into functions or capabilities, which naturally tends to organize as a hierarchy. This is our approach.
Most striking, and important, about crypto payments is that, for the first time in modern history, crypto offers an alternative to what many refer to as the “payment rails”. These traditional payment rails represent the core underlying infrastructure and systems that enable the movement of funds between parties in a financial transaction. The promise of crypto payments is to first complement, then perhaps replace traditional payment rails. This demonstrates why Crypto innovation is fundamentally different from virtually all “fintech” innovation over the past twenty years. Many fintechs have been wildly successful in making payments easier for users (both consumers and businesses), but continue to substantially rely on the traditional payment rails.
The following starts with identifying and defining the functions and capabilities that comprise what we may call the “crypto payments stack”. We then turn to identifying some of the leading companies in each area. As we’ve often stated, crypto does not stand alone. Traditional payment companies are alive and well and, in many cases, embracing crypto. We offer context on the so-called “threatened” traditional players and where they fit.