Bridging the Digital Divide - Part I

Is Web3 the Key to Global Financial Empowerment?

In a modern hyper-connected world, the ability to make seamless payments should be a universal standard. Yet, digital payment systems remain fragmented, divided by geography, regulatory frameworks, and varying levels of technological advancement. Digital payment options may be everywhere, but they’re not seamless or accessible to all, leaving billions out of the loop.

Today, payment gaps span from high transaction fees in cross-border payments to limited options for users outside major economies. This fractured ecosystem impacts people daily, creating trade barriers, slowing down financial inclusion, and ultimately deepening the global digital divide. The time has come to redefine the financial landscape with the powerful emerging Web3 instruments and tech solutions.

The Digital Divide: A Primer for the Modern Era

The digital divide refers to the gap between those who have easy access to digital technologies and those who do not. While traditionally viewed in terms of internet access, the divide extends into financial services, especially in digital payments. Research reveals that over 1.4 billion people globally remain unbanked, predominantly in developing regions like sub-Saharan Africa, South Asia, and Latin America. This exclusion isn’t due to a lack of demand but rather the high costs, complex regulations, and lack of infrastructure that inhibit accessibility.

Even in countries with higher financial inclusion rates, outdated legacy systems, incompatible protocols, and regulatory roadblocks add complexity. Take Europe, for example, where only 52% of small businesses currently accept online payments, compared to 80% in North America. This gap represents a significant obstacle for consumers and small businesses that are increasingly dependent on digital transactions.

Navigating Fragmentation in the Global Payments Ecosystem

While digital payments are growing rapidly — with global digital payment transactions expected to exceed $14 trillion by 2027 — the sector itself remains fractured. Each payment provider often operates in a closed loop, meaning payments made on one platform (like PayPal) may not be accepted on another (like Apple Pay). Moreover, ⅔ of adults worldwide are now using digital payments, 89% in the U.S. This fragmentation is the result of several factors:

1. Regional Preferences and Regulations: Different regions favor different payment systems. For instance, China’s WeChat Pay and Alipay control over 90% of the Chinese market, but these systems are not widely accepted in Western markets. Similarly, Pix, Brazil’s real-time payment system, has over 150 million registered users, but it’s virtually unusable outside of Brazil.

   
   

2. Technology Limitations: Many traditional banks rely on outdated technology, limiting their ability to integrate with newer digital platforms. According to a 2019 survey by the Federal Reserve, nearly 65% of U.S. banks indicated that updating their systems to accommodate modern payment protocols would require significant investment, which they are often reluctant to make.

   
   

3. Compliance Complexities: Financial regulations vary widely across jurisdictions, with countries like the U.S. maintaining stringent Know Your Customer (KYC) requirements. In the EU, MiCA (Markets in Crypto-Assets) seeks to standardize crypto regulation, but fragmented approaches to digital currency between jurisdictions lead to different compliance requirements, adding hurdles for payment providers who operate internationally.

   
   

Fixing the Network Rifts

Moreover, the fractured nature of digital payments has several adverse effects on both personal and business transactions such as:

• Cross-Border Remittances: Migrant workers, who sent an estimated $794 billion to low- and middle-income countries in 2022, face high transaction fees due to fragmented payment systems. Cross-border remittance costs average 6.3% globally, but with more streamlined digital infrastructure, these costs could potentially drop below 3%.

  
  

• E-Commerce Limitations: Cross-border online shopping is hampered by incompatible payment systems, with over 70% of online shoppers in Asia-Pacific stating they abandoned transactions due to a lack of preferred payment methods, according to a report by J.P. Morgan.

  
  

• Tourism and Travel: Tourists face currency exchange fees, card compatibility issues, and regional payment system exclusions. According to the World Travel & Tourism Council, around $1.3 trillion in travel-related expenses is processed annually. However, fragmented systems mean tourists may encounter up to 10% in hidden fees when paying abroad.

  
  

This set of issues underscores the critical need for merchants to offer diverse and locally favored payment options to reduce cart abandonment rates and enhance the online shopping experience for consumers.

Bridging the Divide

In this fractured landscape, solutions like DaffiOne Wallet and DaffiOne Pay offer innovative ways to help bridge the digital divide. The company behind DaffiOne platforms focuses on empowering users with self-custodial accounts, enabling complete control over digital assets without relying on custodial services.

First, it’s DaffiOne Wallet — Designed for a global audience, this multichain app (14 chains currently announced) emphasizes user autonomy in managing digital assets and offers an intuitive, user-friendly interface. By targeting users of popular wallets like MetaMask and Trust Wallet, which together boast around 33 million monthly active users, DaffiOne Wallet aims to appeal to both novices and seasoned crypto enthusiasts. It integrates advanced security features, such as biometric authentication and multi-signature capabilities, to protect users’ assets better. Additionally, the wallet offers a Decentralized Identifier (DiD) feature, helping users establish secure, decentralized identities. Notably, while KYC integration is still under development, it is set to be managed by Sumsubcom, a leading KYC provider, ensuring compliance with regulatory standards while maintaining user privacy.

The next vital component is DaffiOne Pay, which serves as a merchant-oriented, closed system that also operates on self-custodial accounts. Designed with merchants in mind, it enables third-party payment providers to use its framework under their licenses, ensuring regulatory compliance across multiple industries and countries. DaffiOne Pay significantly reduces transaction fees and enhances transaction speeds, offering a competitive alternative to traditional payment processing systems. This benefits both merchants and customers, facilitating faster, more secure transactions and reducing hidden costs that often create financial barriers.

DaffiOne Wallet will support 14 blockchains by the end of 2024, including both EVM and non-EVM chains, with more integrations planned. By focusing on blockchain and self-custody, companies like Daffi are poised to make payments as seamless and inclusive as the internet itself. With these tools, the world could finally see a more connected, financially inclusive future.

Learn more by visiting the website, and following the project on Twitter and LinkedIn

Daffi One’s innovations in self-custodial wallets and payment systems bring that vision closer by bypassing the limitations of traditional financial structures. Products like DaffiOne Wallet and DaffiOne Pay represent a much-needed shift toward an inclusive financial ecosystem where users control their assets, reduce costs, and participate fully — no matter where they’re located.

Bridging the digital divide in payments is not a one-size-fits-all solution. It requires regulatory cooperation, technological innovation, and a commitment to financial inclusion. In a world where technology is advancing at lightning speed, accessible payments should be viewed not as a luxury but as a basic right.

Blockchain-based startups are uniquely positioned to drive this shift, as they’re the architects of a new financial era, building bridges to a future where Web3 is a staple of everyday life. Their ultimate mission is clear: to make decentralized digital finance accessible to all, propelling society toward a more inclusive global economy.