How is Web3 revolutionizing the future of payments?

Sudeep Srivastava August 28, 2023
web3 payments

Whether selling to businesses or consumers, changing consumer habits are daunting and worrisome for many. While this concern is understandable, providers should see it as a red flag to adapt and meet new consumer expectations to stay caught up. In addition, companies must rethink their customers’ purchasing options to meet changing demands.

Some proactive organizations that have realized the need for change are viewing the current circumstances as an opportunity to reevaluate the payment options they offer customers to provide more choices for those looking to control their spending. Indeed, offering more payment options means they can avoid losing customers for whom previous billing options are no longer viable.

Web3 payments is coming out to be a viable option for businesses in their effort to offer safer, smarter, and simpler payment options to their customers. For instance, Visa and Mastercard have actively explored Web3 payments technology in the past few years. Both the Fintech giants announced their partnership with crypto wallets. Mastercard also launched its first crypto-backed credit card in April 2022.

But can Web3 payments really revolutionize the payment space on the Internet? 

To understand this, let us first quickly look at what web3 is all about.

What is Web3?

In short, Web3 is a set of proposals for reforming the Internet to make it more democratic and accessible. In addition, it seeks to combat the power wielded by a few large tech companies and their payment infrastructure, using Blockchain as an efficient way to power the Internet.

All data metrics would be stored in a decentralized location, and the decentralized network in place of private companies would verify all processes. In addition, currency and information would be sent without going through a third party.

know the complete potential Web3 has to offer for your FinTech business

The modern web3 payment solution – How it is revolutionizing the payment space

The number of different billing and payment options has increased recently, which some have quickly adopted. One of the most important new business models companies are rolling out is a usage-based pricing model (UBP) that allows end users to pay only for what they consume. It’s positive to see companies actively implementing alternative billing models to meet changing customer needs. However, while this decision seems simple, setting up the processes is a different and more complicated matter.

When companies no longer generate the same invoice for every customer, they need to be able to capture various incoming data on user usage and subscriptions, apply it to contractual rate agreements, and quickly create a single bill precisely. For businesses that have never used multiple billing options, this can be a challenge as they need to implement new processes, which, if not implemented correctly, can lead to inaccurate billing. This has an impact on the customer’s time and, therefore, on the reputation of the company.

Why is Web3 the future of payments?

Web3 payments technology authorizes money to be exchanged without entailing centralized intermediary companies, in line with the ideas of privacy and democratization. For instance, Venmo allows the transfer of funds via a mobile app via a free account. Although Web3 data is encrypted, it also means that online shopping customers can be confident that their personal information is secure and their transaction details are not accessible.

[Also Read: How much does Venmo app development cost? A complete guide]

Web3 payments could also increase the number of currencies people exchange and hold, expanding financial opportunities beyond just fiat currencies. While traditional Web2 payments can take days to settle, blockchain payments settle in minutes or seconds. In addition, international transfers are much easier with a Web3 payment system, eliminating the need for complex currency conversions and expensive funds transfer fees.

Web3 payments are decentralized finance (DeFi) that use secure ledgers to process money transfers and seek to fight the scrutiny of large financial institutions such as banks, which often demand fees and data submission in exchange for their services.

Now, with this transition to web3 and the development of decentralized protocols that make it possible, can we imagine a world where we would only disclose the data essential to providing services?

More specifically, can we imagine a world where a purchase on an e-commerce site like Amazon would be made without disclosing credit card information?

Let’s find out in our next section.

How to make payments in web3?

Let’s explore this case.

Anatomy of a Purchase on Amazon Today

Today, the purchase process on Amazon – or any other e-commerce site – traces the following path.


As can be seen, the information attached to the customer’s bank card – the metadata – is transmitted to all the parties involved in the payment cycle – from the e-commerce site to the PSP via the customer’s bank.

Upon receipt of the transaction information by the PSP, the customer’s bank will verify the following:

  • The customer’s ability to pay for the transaction: the bank will consult the account balance, the payment limit of the customer’s card, and the customer’s history
  • The risk of the transaction: the bank will check whether the site on which the transaction is carried out is secure, the history of refused transactions, or the site’s location concerning the customer.

It is only at the end of these checks that the transaction is finally accepted or refused.

In this process, a variety of personal data is shared with the actors described above: the identity of the account holder and information related to the card (the expiry date of the card, the CVV, and so forth.)

These long and complex verification processes are essential to protect against bank fraud and potential errors. The key to these checks is to establish a relationship of trust between a merchant site, its customer, and the latter’s bank.

Because if the merchant site was certain of the customer’s authenticity and ability to pay, and if the bank was certain that the payment request came from a trusted site and that his customer could indeed pay, everything would be much simpler.

Add to this the possibility of creating this trust without having to exchange the personal data of the stakeholders, and you have all the promises of the Self-Sovereign Identity (SSI).

What is SSI all about?

Self-Sovereign Identity is an approach that ensures a smooth transition from web2 to web3 payment innovation.

The Self-Sovereign Identity approach, made possible by DIDs [Decentralized identifiers] and VCs [Verifiable Credential] but also owing to ZKP and selective disclosure, initiates the transition to web3 payments, the promise of a more transparent, verified, secure and privacy-friendly web personal data. 

But above all, where this would be to the detriment of the user experience, on the contrary, the SSI approach makes it possible to simplify the transaction validation processes significantly in the payment framework and to the triangle of trust and the interoperability of standards.

get a smooth transition from Web2 to Web3 payment options

Now, let’s see how an SSI approach can solve the current payment problems.

Selective Disclosure and Zero-Knowledge Proof’s function is to disclose only what is strictly necessary. Before seeing the payment process in SSI mode, it is necessary to recall its definition briefly.

Self-Sovereign Identity (SSI) is where individuals manage and control their digital identities and personal data from end to end.

What does this imply for a user experience, such as creating an account on the Internet?

Today, when a user creates an account on a social network, he creates a digital identity that consists of the attributes entered during his first connection – first name, last name, email address – and all the information attached to him as of its use, i.e., its publications, its interactions with the publications of its friends and the messages sent.

Tomorrow, in an SSI approach, this same user can create an account on a social network via his wallet without declaring his data to the operator and fearing any reuse of his data for advertising purposes.

Today, most social networks prohibit access to individuals under 13.

How to prove this without revealing the Identity of a user?

verification of eligibility

What you need to understand from this image:

  • The issuer (here, the State) delivers the verifiable proof to the user (an identity card, for example) and anchors the user’s attributes in a register of evidence.
  • The user stores the verifiable credential in their wallet. He wants to create an account on a social network without providing personal data, which poses a problem for the social network, which nevertheless intends to verify the user’s age.
  • The user uses his wallet to create an account on this social network without giving access to verifiable proof (which contains personal data). He presents proof of his eligibility to access the social network.
  • The social network will verify the authenticity of the data provided in the identity and evidence register.

This mechanism for disclosing what is strictly necessary is made possible with two key concepts: Selective disclosure and Zero-Knowledge Proof.

  • Selective disclosure: The user can generate proof from a few attributes (those deemed helpful by the social network to create an account). In our example, this would prove that the user is over 13 years old by presenting your identity card but without revealing any other information present on your identity card (such as your date of birth and postal address). Concretely, the user only discloses the attribute necessary for the proof.
  • Zero-Knowledge Proof: With this cryptographic protocol, the user can find the authenticity of an attribute without having to reveal the value of the data. This would amount, for the user, to answering the question “Are you over 13?” with a simple “Yes,” which has the same value as the presentation of an identity card.

Now that we have gone back to the basics of the Self-Sovereign Identity approach and the importance of selective disclosure and Zero-Knowledge Proof let’s look at a concrete application case.

Payment in Self-Sovereign Identity mode

In 2022, Tidio estimates that worldwide sales spent by people were $5 trillion on e-commerce sites (up to 15.1% compared to the previous year), making payment by bank card an essential act of the online business.

At the same time, acts of cybercrime targeting means of payment have experienced a significant upsurge with the massive use of e-commerce as a payment trend that is not about to be reversed.

With the context in mind, let’s finally answer this essential question – What would a payment on an app like Amazon look like without using the credit card information?

How Payment Processing Works for users on a merchant site


If a customer were to pay for a good on a merchant site by adopting an SSI approach, this is what the new customer journey would look like following the acquisition of a product on Amazon:

  1. The customer requests proof of payment to validate the purchase. The bank then issues a Verifiable Document which contains the banking information necessary to ensure payment (Amazon wishes to verify the customer’s Identity and solvency). Owing to selective disclosure and ZKP (Zero Knowledge Proof), Amazon does not need credit card information.
  2. The customer stores the proof of payment in his wallet, which will therefore serve as a means of payment on merchant sites that allow connection with a wallet.
  3. The customer presents proof of payment to Amazon.
  4. Amazon verifies that the proof of payment provided by the customer is authentic and certified by the customer’s bank by directly querying the latter’s wallet – connected to the distributed ledger in which the proofs are anchored.

It is interesting to note that, in this payment process in SSI mode, the bank does not know the Identity of the merchant site on which its customer made a purchase.

This verification is much faster than that mentioned in the classic payment model that we know, but this is not the most interesting point.

Here, it is the fact that the transaction was carried out by disclosing only the information strictly necessary for payment without a bank card.

What may seem trivial in practice has much more interesting consequences regarding confidentiality and security since, in this SSI approach, the proofs are stored in a decentralized register, and the end user is the only one who can consent to all actions that concern him.

This Self-Sovereign Identity approach, which is based on the decentralization of the evidence register (which makes it possible to secure the processes of verification of evidence by public and private actors) and on selective disclosure and the ZKP for the respect of data confidentiality personal data (GDPR compliant) allow end-user management and control over all their actions in the digital payment technology world.

Applied in the example of payment on a merchant site, the SSI approach only requires the implementation of an interface ensuring the support of a wallet on the company side and the adoption of a protocol for identity management. Also, with Web3 game development services, it is possible to utilize decentralized identity protocols, which can be implemented into fintech platforms to offer secure and portable identity verification.

How to select a good financial software development company for a Web3 payment processing solution?

Every business has different needs in terms of size, target audience, budget, and other factors. But a few things remain common; you need to get a secure, simple and flexible solution. So always choose a payment processing solution based on your unique needs and long-term goals. Consider a few factors before choosing a payment service provider:

  • Opt for a financial software development company that is future-ready with decentralized payment solutions, leveraging the power of distributed ledger technology. Also considering a diverse team with specialized Web3 solution development experts to provide high-quality services should be a priority for your organization.
  • Learn about pricing models and compare them with other providers to choose the best one for your budget.
  • Ask how secure their payment solution is and their compliance policies to protect buyer accounts and data.

For more detailed insights into the various factors to consider while choosing a FinTech development partner, read, “How to Choose the Right Financial Software Development Company? 10 Factors to Consider”.

Conclusion:  The future of Web3 payment infrastructure services

The need for online payment solutions is growing rapidly around the world due to the growing number of online purchases. And the latest trends show that it is likely to increase in the future.

So, if you are an organization or a brand, be sure to integrate the best Web3 payment processing solution into your business to provide an improved, faster and more secure transaction process.

Appinventiv, as a leading financial software development company, has a gamut of Web3.0 solutions that ensures traceability and monitoring of operations. Innovative and at the forefront of new technologies, we take pride in adapting to all types of services and very diverse sectors with web3 payment infrastructure services.

integrate web3 payments into your business

FAQs around web3 payment infrastructure

Q. What are Web3 payments for? 

A. Web 3.0 enables users to take back power over their cash with the security of the Blockchain.

  • The centralization of power in the hands of platforms: they hold, use and monetize personal data, sometimes without the knowledge of their users. This concentration of power in the hands of GAFAM is unfair for the end user and unfair compared to other market players. They have an unfair competitive advantage by having privileged access to personal data (and monetizing their access).
  • The vulnerability of digital identity management systems: these systems pose severe risks to the security of stored data 
  • The fragmentation of personal data: with nearly 150 accounts on the Internet on average per user, the management of digital identities is a real headache both for end users who often use the same passwords to access several accounts and also for those responsible for information systems which must secure access to their resources.

Q. What value does Web 3.0 payment infrastructure bring to organizations?

A. In web3, you will no longer need to go through a banking intermediary to transfer money.

This new economy of value is driven by these famous tokens and other crypto-currencies you have undoubtedly heard of and feed this famous Token Economy.

Q. How will web 3.0 change our relationship with data protection?

A. If web 3.0 will profoundly transform the relationship between individuals and organizations, it is precisely because it builds a layer that did not exist until now: the identity layer.

Q. Why is it so challenging to create an identity layer on the Internet?

A. Simply stated, the creation of this identity layer that is currently missing is based on decentralization, the conceptual basis of web 3.0 made possible by blockchain technology, and on an approach – Self Sovereign Identity.

Self-Sovereign Identity is an approach where the individual must be able to control and manage their digital Identity without the intervention of a third-party administrative authority.

These two ingredients give a whole meaning to protecting personal data on the Internet.


Because, in web 3.0, it is the end user who controls their own digital Identity and the personal data constituting it – and no longer commercial organizations, institutions, or other third parties.

Sudeep Srivastava
Co-Founder and Director
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