The metaverse economy is expected to To reach $13 trillion by the year 2030. so financial institutions have started to explore opportunities within the virtual world. In this context, payment for digital assets will be the main tool to create a seamless user experience.
To ensure seamless virtual commerce, each digital environment, as well as the metaverse as a whole, will have to have its own digital economy, and the Well-supported payment methods will be key for a fully functioning metaspace.
In terms of security, in real life, the financial sector has already gone to great lengths in terms of maintaining the security of people’s assets. However, the online space is the target of endless cyber attacks that with the metaverse will be magnified..
According to Simas Simanauskas, ConnectPay’s director of agreements, the credibility of any virtual world will depend heavily on having state-of-the-art security, this also includes all payments. “Any cryptocurrency wallet functionality will require security standards similar to those of Secure Client Authentication (SCA) used in Europe. If do not go so far as to use these types of measures there is a risk that customer wallets will be emptied in a matter of minutes“adds the expert.
The SCA establishes mandatory two-factor authentication for all online transactions and contactless payments made within the European Union (EU), thus ensuring an additional layer of security.
In contrast, Simanauskas warns that a large number of metaverse users will not have cryptocurrency balances, although blockchain-based payment methods are expected to dominate. “Most likely, users will simply want to buy with their cards or other familiar methods. The element of familiarity will be crucial, as users will need to be able to recognize a payment method provider before trusting them with sensitive transaction details, so this is a good time for fintechs to start establishing themselves in the metaverse.“.
BBVA and Santander, globally known banks made their debut in 2021 within the metaverse, testing possible projects to operate in this environment. JP Morgan has been one of the first to take the initiative, most recently the leading bank opened the Onyx room in Decentraland.So did HSBC, with the aim of managing the investments of its virtual clients with larger portfolios. In late April, Standard Chartered Bank reported that its subsidiary, Standard Chartered Bank (Hong Kong) Ltd (SCBHK), partnered with The Sandbox, “to create a metaverse experience.”
Virtual space could Help further reduce the distance between traditional banks and their customers.for whom it would no longer be necessary to travel to any physical bank branch by being able to receive the same experience in the metaverse, although simanauskas does not believe that this is the area in which banks are looking to make a profit. Instead he believes that “where traditional banks could take advantage of the opportunity is by financing and facilitating transactions within the metaverse.as well as in digital real estate.”
Virtual plots of land in Decentraland have appreciated in value at a rapid rate. During its first auction a plot cost $20. By 2021, it was selling for an average of $6,000, and by early 2022, it soared to $15,000. Over the past year, real estate sales in the four major metaverses reached $501 million and at the current pace could reach nearly $1 billion by 2022.
“The virtual space is an incredible asset and I wouldn’t be surprised if it becomes bankable in the future,” Simanauskas notes.
FINTECHS IN THE METAVERSE
For fintechs, the metaverse represents a hub in accordance with their digital nature. They are best positioned to drive the market as they do not encounter red tape and have more flexibility to devise new solutions.
To exploit this advantage, Simanauskas advises. consolidate brand awareness and be prepared to act quickly. once the various regulations start to come into effect. “Fintech and Covid-19 have taken banking from branches to the Internet and mobile devices. Now, the metaverse promises to take people from their living rooms to the next-generation virtual space. If successful, there will be a whole new market for the well-known brands that will be the first to take advantage of the new demand,” the expert concludes.