Author: Yokiiiiya
Over the past six months, I've gone from being an observer of Web3 to entering the payment industry. And now, I've chosen to stop and no longer work on Web3 payments.
This isn't a retreat after failure, but a judgment and adjustment made after truly getting involved. In these six months, I've been to Yiwu, Shuibei, Putian, and even Mexico, seeing how payments are actually developed in those bustling places mentioned in reports. I've also been involved, building a Web3 payment MVP, taking over accounts, and developing Web3 payment tools, trying to run my imagined path from the first step to the last.
But the deeper I go, the clearer one thing becomes: this isn't an industry where "making a good product guarantees success."
The payment industry isn't about functionality, but about bank relationships, licenses, capital efficiency, and the ability to manage risk in the long term. Many seemingly "profitable" payment businesses are essentially earning risk premiums, not capability premiums—they just haven't collapsed yet. What truly determines how far a payment company can go is never how much money it makes, but whether it can withstand and survive before the risks become apparent. This article isn't meant to negate the industry, but rather to remove the filters, lay bare the true structure, and provide newcomers with a more sober assessment. (A few weeks ago, I also recorded a podcast with former Kun Global VP Robert, Nayuta Capital CEO, and former Didi Finance CEO Alex, discussing the same issues.) I. Why Did I Enter the Web3 Payment Industry? As a serial entrepreneur, I ended a multi-year startup project last year. During the company's closure, I also gave myself some time to rest, returning to a more "empty" state to seriously consider where to focus my energy next. Six months ago, a friend invited me to Hong Kong to try my hand at a Web3 payment-related startup. At the time, I wasn't familiar with Web3 itself, nor did I have much knowledge of the payment industry. However, from a macro perspective, it was clearly a large enough industry still in an upward cycle, and there was potential for integration between Web3 and AI. In my previous entrepreneurial ventures, we had done multinational business and developed platforms and software related to remote work. In these experiences, I constantly encountered the same fact: business could quickly expand globally, but the flow of funds always lagged behind. Slow settlements, fragmented pathways, opaque costs, and uncontrollable payment terms—these problems might be circumvented with experience and patience when the scale was small; but once the business scaled up, they wouldn't be solved by "management capabilities," but would only continue to amplify. Money cannot be transferred as freely as information; this is an implicit ceiling for many globalized businesses. It is against this backdrop that, when I began to systematically understand the actual use of Web3 payments at the clearing and settlement level, it presented not an abstract technical narrative, but a solution that logically and directly addressed these pain points: faster settlement speeds, greater transparency, and near-24/7 clearing capabilities. At the time, this seemed like a direction that could solve real problems and was also part of Day 1 Global—I wasn't drawn in by Web3 itself, but by the fact that, in the specific scenario of payments, it seemed to offer a superior structure—at least logically, it seemed capable of addressing those long-standing but consistently ignored frictions. Looking back now, I gradually realize that, like many others, I assumed a premise that has since been constantly challenged by reality: that as long as clearing and settlement efficiency is high enough, payments will naturally migrate to the blockchain. This was even simplified to an intuition—payment is simply about facilitating transactions; as long as the process runs smoothly, cash flow can be generated effortlessly. Based on my lack of understanding of Web3 and the payment industry, I decided to spend three months truly immersing myself in the industry, understanding its structure, before deciding what to do and where to stand. II. The real competition in payment is never about the product. When I arrived in Hong Kong, my initial ideas weren't complicated. My initial thought was simple: leveraging existing resources and connections from friends, I would start with OTC or relatively simple payment scenarios to generate cash flow first, and then determine what to do next based on real needs. I wasn't there to do research, nor was I going to observe in the long term; I wanted to see if it was possible to first create something that worked, and then calibrate the direction in real business. But soon, the external environment underwent a significant acceleration. In May, the US passed the GENIUS Act, igniting the entire industry almost overnight. Capital, projects, and entrepreneurs poured in, transforming Web3 payments from a relatively niche infrastructure topic into a frequently discussed "new opportunity." From the outside, this seemed like good news; but for a newly established startup team, this sudden buzz was not necessarily a good thing. The more chaotic, noisy, and rapidly forming a consensus, the easier it is to obscure the real problems. Internet giants, financial institutions, banks, traditional Web2 payment companies, and Web3 native teams all entered the market, everyone talking about opportunities, but few discussing structure. At that time, I felt it was even more important to immerse myself in the industry and truly understand it. 1. The "bustling" scene in the report is not the same as what I saw on the ground. After actually starting to work on the front lines, the first thing I did wasn't to continue optimizing the product solution, but to see: Who is using web3 payments? Why are they using them? Where are they being used? I first went to Yiwu, which was most frequently mentioned in the report. In many studies and presentations, Yiwu is often used as a representative example of "web3 payments already being widely adopted." But what I saw in person was a different story. Stablecoins do exist, but their use is more fragmented, relationship-driven, and hidden behind the scenes. It hasn't become a standardized, product-replicable settlement method as described in the report. Many transactions aren't due to "optimal efficiency." I then went to Shuibei, Putian, and Mexico, and also learned about the penetration rates in different places like Africa and Argentina; the situation wasn't fundamentally different. Web3 payments aren't nonexistent, but they've never formed a stable, scalable mainline; more often than not, they're just a "patch" embedded in the existing system. The actual penetration rate doesn't match the level of interest we perceive in reports, communities, and discussions. However, it was precisely through these exchanges that I gradually shifted my perspective from "can we create a product?" to the industry structure itself. I began to realize that the incremental market for stablecoins might not be "within the crypto world," but rather in existing business scenarios within the Web2 world that have long been slowed down by traditional clearing and settlement systems. This isn't a narrative shift, but rather a slow-moving upgrade in fintech. At the same time, questions began to emerge: if actual usage is so fragmented, is a productization path truly viable? 2. When we actually started developing the application, all the problems pointed to the same thing: the channel. From July to September, I continued my on-site research while systematically contacting potential clients. Human resources companies, insurance companies, tourism companies, MCN agencies, service trade companies, cross-border business partners, game companies… their needs varied, but the core issue they addressed was highly consistent: money should flow faster, cheaper, and more stably. Payroll, task settlement, B2B payments—these scenarios are logically very suitable for stablecoins. Initially, we also thought the application layer was a viable entry point. But soon, an unavoidable prerequisite presented itself: you must have a stable, compliant, and sustainable fiat-to-digital currency channel. We started connecting with several service providers that seemed good on the market, but in reality, it was difficult to say that any of their channels were "long-term reliable." To meet business needs, we even tried to build our own payment channels, but only after actually starting did we realize: this wasn't a product problem at all, but an infrastructure problem. Bank relationships, licensing structure, KYB/KYC compliance, risk control capabilities, credit limit management, regulatory communication… the entire channel layer highly relies on long-term accumulated credit, experience, and capital. These are capabilities that a small team with an internet background cannot acquire in a short period. It was here that I truly realized for the first time: payment is not an industry where "making a good product guarantees success." 3. You think you're making money, but you're actually incurring a risk premium. During this process, one sentence struck me deeply: payment isn't about how much money you earn, but how much you can spend. Many seemingly "work-ready" Web3 payment paths are essentially not a capability premium, but a risk premium. The more dangerous aspect is that many people are unaware of the risks they are taking, or where those risks are specifically hidden. Is it a compliance issue with the counterparty? Is it a mismatch in the capital pool structure? Is it a lag in risk control rules? Or is it a gray area of regulatory interpretation? If the feasibility of a business is based on "nothing going wrong yet," then it is not a structure that can be safely scaled up. 4. The essence of payment is a "flowing" business. Gradually, I began to understand payment from a simpler perspective. The essence of payment is actually a "water flow" business. Whoever controls the waterway makes money; the larger the flow from the tap, the greater the profit potential. You get a cut as the water flows past your door—it sounds like a near-easy money business. But precisely because of this, payment is never a simple business. Not all companies "standing by the water" can make money. The truly profitable payment companies in the long run are often those with extremely strong control over the volume, pressure, backflow, pollution, and leakage of the water. How much water you can collect depends on how much risk you can bear; how long you can let the water flow depends on your tolerance in compliance, risk control, and regulatory environments. Many seemingly "high-flow" paths are essentially just temporary stagnation. It is in this process that I have developed a more complex, but also more genuine, sense of awe for the payment industry. Its appeal lies not in who has created another new product, but in its honesty in telling you which industries are truly profitable and which are just making a lot of noise. Standing on the waterway, you can see where the real money is flowing, not who is constantly doing PR. 5. Payment is a good business, but not one we can do well. Having come this far, I must face a crucial but challenging judgment for entrepreneurs: Payment is a good business, but it's not the kind of business we can excel at. This isn't a rejection of our direction, but rather a respect for our resources. What the payment industry truly needs isn't rapid product iteration and trial-and-error, but rather long-term, stable banking relationships, a sustainable compliance system, mature risk control capabilities, and the trust built through repeated negotiations within the regulatory environment. These capabilities aren't something you can acquire simply by "working hard," nor can they be acquired in the short term through intelligence or effort. They are more like industry-level assets, often gradually formed only within specific types of teams and specific time windows. After truly viewing payments as a "water flow business," I realized more clearly that what determines whether a team can stand on the water for the long term isn't whether you want to, but whether you have the structure to withstand the pressure. Under this premise, continuing to move forward is no longer a rational investment for us, but more like using time and luck to fight against an industry structure that isn't on our side. This issue ultimately led me to my next choice. III. I'm still optimistic about payments, but I've seen its true battlefield. It needs to be clarified first that my decision to stop working on Web3 payments is not because I'm bearish on the industry. On the contrary, over the past six months, I've become increasingly convinced that the structural opportunities in the payments industry remain substantial. However, when I break these opportunities down, I've also gradually realized something more brutal, but equally important—payments is a business with a longer time horizon, a heavier structure, and higher resource requirements. Its opportunities truly exist, but they are not evenly distributed among every startup team. 1. The incremental growth in payments is not a short-term bonus, but a long-term restructuring. If we broaden our perspective, cross-border payments are not a question of "whether it can explode," but rather an ongoing process of infrastructure reconstruction. The continued spillover of global supply chains, the growth of cross-border service trade, and the accelerated collaboration of distributed teams—these trends combined are constantly amplifying the frictions of the traditional clearing and settlement system. In this process, the value of web3 payments is not reflected in "cheaper prices," but in three things: Significantly improved turnover efficiency; Transparency of clearing paths; Unified settlement capabilities across currency zones and regulatory regions. This is a structural improvement, not a tactical optimization. Because of this, it naturally belongs to a project spanning a decade, not a market that can be driven by product sprints. 2. The real difficulty is not "receiving money," but the financial system within the Marketplace. After experiencing enough real-world scenarios, I've increasingly realized that the difficulty of payments has long since ceased to lie in "receiving money" itself. Especially in the Marketplace scenario, payment is never an isolated component, but rather an entire ecosystem-level financial system. Buyers, sellers, platforms, logistics, livestreamers, delivery riders, tax authorities, frozen accounts, subsidy accounts—all roles are interconnected and constrained within the same financial chain. In such a system, the real barrier to entry is not the payment interface, but rather: Custody and freezing mechanisms; Revenue sharing and payment term design; Risk control and anti-fraud capabilities; Cross-regional compliance and regulatory obligations. Once these systems stabilize, they naturally possess the potential to extend into financial capabilities; however, they also place extremely high demands on the team's financial strength, risk control system, and long-term patience. 3. Web3 Payments: Not a Front-End Revolution, but a Back-End Upgrade What has become increasingly clear to me over the past six months is that the true scaling up of Web3 payments will not occur on the user end. It won't explode simply because users start actively using wallets; rather, it will happen because companies are upgrading their treasuries, reconciliation systems, cross-border settlement pathways, and fund pool management methods. In other words, the mainstream path is likely to be: the front-end Web2 remains unchanged, while the back-end is restructured using Web3. This is a "hidden" upgrade. And this upgrade precisely means that it relies more on system stability, compliance certainty, and long-term operational capabilities, rather than market education. The real breakthrough point is not in the most mature markets either. Geographically, the increase in payments is also uneven. The Asia-Pacific region is already a relatively mature market. True structural growth is more likely to occur in regions like Latin America, Africa, the Middle East, and South Asia: "Severely fragmented payment systems," "High costs and complex pathways," and "Stronger willingness of users and merchants to migrate." However, these markets also face challenges: high localization, significant regulatory differences, and stringent operational requirements. They require not "cleverness," but rather long-term, dedicated cultivation. When I truly put these opportunities together, I had to face a clear conclusion: payments are indeed a good business, but the resources it requires—long-term stable banking relationships, a mature and sustainable compliance system, risk control capabilities that can withstand stress tests, and credit built up through repeated interactions in the regulatory environment—are beyond the current capabilities of our team. This is not a denial of our direction, but a respect for reality. The battlefield of payments still exists, but it is no longer beneath our feet. It is based on this judgment that I ultimately chose to stop and rethink: if I'm not standing on the water, where else can I stand to continue participating in this ongoing structural change?
IV. After I Decided to Stop Doing Payments
When I actually made the decision to stop doing Web3 payments, I didn't feel a strong sense of "ending." It was more like an exploration had finally reached a point where it should stop. I didn't leave the industry. I just went from trying to stand on the waterway to collect water, to standing beside the waterway, observing how the water flows and where it ultimately flows to.
In the process of repeatedly dissecting the payment structure, a judgment became increasingly clear: payments solve the problem of liquidity, whether money can move and how quickly it moves; but what truly determines long-term value is never the liquidity itself, but rather—after the liquidity flows, where the money stays and how it is managed.
If we look back at the development path of China's fintech over the past twenty years, this logic is actually very clear. Payment is just the entry point, the balance is the transit station, and what truly forms scale and barriers is the subsequent fund management and asset allocation system.
Yu'ebao, Tiantian Fund, and Tianhong are not successful because they "do better in payments," but because they stand behind payments, taking over and reorganizing the already established flow of funds. Payment is the gateway, not the destination. Looking at this structure back in the Web3 world, I see similar problems gradually emerging. A large number of non-aggressive but sufficiently stable asset forms have appeared on the blockchain—lending, short-duration RWA, neutral strategies, portfolio products… They are more like on-chain money market funds, short-term bond funds, and stable allocation tools. The real problem is not "whether there are assets," but rather that most people don't know what kind of risks they face and lack an entry point to understand, compare, and judge these assets. As more and more funds begin to flow on-chain, this problem will only become more prominent. It was at this juncture that I began to realize: even if I don't continue in payments, I can still remain in this changing world in another way. The goal isn't to compete for waterways, but to clearly explain the structure of the waterway, lay out its boundaries and risks, and let people know where it's worthwhile to stay and where extra caution is needed. This is also the direction my team and I will continue to explore. This article isn't about drawing conclusions about Web3 payments, nor is it about advising anyone to move forward or back; it's simply an attempt to clarify why I chose to discontinue working on payments. I hope it can provide some reference for those who follow, perhaps helping them avoid some detours.
Alex
Brian
Kikyo