Virtual reality is expected to become a common way of spending time in the not-too-distant future. It will be as much a part of our lives as we currently use social media and surf the web. We're also about to enter the era of Web 3.0, the metaverse. As the popularity of this technology continues to grow, more businesses will start operating in this space.
One of the most important factors businesses must consider when establishing their operations in the metaverse is the availability of payment solutions. Similar to how Web 2.0 required better ways to make payments online, Web 3.0 will have its own set of payment methods that cater to the needs of users.
Heading to decentralised economy
The term metaverse refers to the next evolution of the internet as a virtual reality world that allows users to interact and work from anywhere. The metaverse is not yet ready to be fully realised, but a few small platforms are already designed to serve as the seed for the real metaverse. Most platforms that are currently designed to serve the metaverse are closed systems. They are powered by various cryptocurrencies, blockchain technology, and smart contracts. This type of economy is similar to how countries operate their respective fiat currencies.
For instance, Decentraland, a popular platform, uses MANA as its currency. On the other hand, HyperVerse, another platform, uses HVT. Although these currencies can be used for transactions in the metaverse, you may be limited if you want to visit a different virtual space that uses another currency. You can easily transfer your money to another platform by trading one crypto for another. This is similar to buying pounds or dollars in foreign exchange.
However, one of the biggest issues Web 3.0 communities must address is the creation of a single currency that will be used for all transactions.
The good news is that blockchain technology could eliminate the need for a single currency. Due to its design, various protocols can communicate with each other and share data, which would allow the blockchain to perform continuous transactions. A buyer could pay in any currency and immediately convert it into the seller's preferred currency, such as Bitcoin, euros, or US dollars. A quick and easy payment system allowing users to easily transact within the metaverse is very beneficial to developing this ecosystem. However, until then, policymakers, banks, and technology companies must work together to create a comprehensive set of payment solutions that will work seamlessly with blockchain technology.
Payments in the metaverse
The metaverse is still in its infancy, and it is unclear whether a single payment system will be widely adopted. Instead, most payment systems work with various fiat currencies and cryptocurrencies.
Fiat in the metaverse
Two types of virtual economies are commonly used in online gaming. The first accepts credit and debit cards, such as Mastercard and Visa. The other uses virtual currencies that can be used in games, such as FIFA coins. The first type of virtual currency is straightforward to use and works exactly like a traditional payment system. The second type is more complex. It requires the completion of a separate transaction, allowing game developers and publishers to keep their prices stable.
BNPL in the metaverse
One of the most recent and widespread uses of cryptocurrencies in the metaverse is buy now pay later (BNPL). This service allows users to purchase items with little or no interest. It is very popular because it allows users to spread the cost over a longer period. Although BNPL has been around for a long time, it is seldom used for purchasing digital goods. However, with the emergence of cryptocurrencies, this payment method is expected to provide a broader range of options.
One of the leading companies in this area is Decentraland. Through its partnership with Binance, it is now possible for users to purchase virtual assets and land in the metaverse using Binance's BNPL Pay. This will allow them to easily revitalise the platform's economy since a single plot of virtual land can cost as much as $15,000.
Another example is XRPayNet, which is a cryptocurrency built on the XRP ledger. It aims to become the Afterpay of cryptocurrencies. Although BNPL is still in its infancy in the metaverse, partnerships such as those between Binance and Decentraland are expected to significantly impact the future of cryptocurrency payments.
How businesses can take part in metaverse payments
As the evolution of the payment system continues, business leaders are expected to start identifying ways to create new payment methods that will allow them to provide a more seamless and secure experience for their customers. The emergence of the metaverse will create new expectations and behaviours among consumers, and it will require innovative solutions allowing them to seamlessly move from one virtual world to another. This frontier will also allow them to explore the various building blocks of the blockchain and Web 3.0.
Some companies might already do everything in their power to replicate their web presence in the metaverse. However, many possibilities will allow them to go beyond just replicating their current online presence. For instance, if a company manufactures a physical product, such as furniture or car parts, it might be able to sell virtual versions of those in the metaverse.
Likewise, companies can create and sell virtual goods in the metaverse. In these early days, businesses must find ways to incorporate this technology into their sales and business goals. The evolution of the web into a place where business transactions can take place offered significant opportunities for entrepreneurs in the early 20th century. This is why businesses must start thinking about how they can capitalise on the potential of the metaverse.
The ability of cryptocurrencies to provide a more secure and seamless payment experience should be the main consideration as businesses adapt their metaverse payment systems. Despite the drawbacks of cryptocurrencies, such as rising energy costs, their benefits are likely to outweigh their disadvantages.
Unlike traditional payment methods, cryptocurrencies are a virtual-native form of payment that will likely power the metaverse as it evolves.