The Current Status and Future Trends of the Encryption Payment Industry

The payment industry is at a critical stage of transformation. Compared to earlier times, existing products have made significant progress in design, experience, and compliance, but there is still some distance to go before building a complete and sustainable Web3 payment framework. Nevertheless, this "unformed" state has instead become one of the focal points of recent market discussions.

As a new form of encryption payment, U Card is essentially a transitional mechanism. It is neither a traditional Web2 recharge card nor the final form of a new generation on-chain wallet or payment channel, but rather a product of the current compromise between on-chain payment and off-chain consumption needs.

The U Card achieves a combination of Web2 experience and Web3 asset logic by binding on-chain accounts and stablecoin balances, while providing compliant off-chain consumption interfaces. The reason this model has garnered significant attention in the past six months is partly due to users' ongoing imagination of daily consumption of on-chain assets, and partly because stablecoins are attempting to expand from traditional scenarios like cross-border exchange and OTC settlement to C-end retail and local payment sectors.

However, the U-card model faces significant challenges. Most projects retract their operations shortly after launching, especially those lacking the support of exchanges or primary issuers. The operation of the U-card heavily relies on the permissions of the traditional financial system, barely maintaining itself between compliance pressures and thin profits, making it difficult to sustain in the long term.

For wallets and exchanges, the U Card is more of an auxiliary feature to enhance user engagement rather than a primary source of profit. However, for Web3 startup teams lacking traffic entry points and experience in financial infrastructure, it is extremely difficult to build a sustainable U Card project relying on subsidies and scale.

The future development direction of encryption payments remains controversial. One viewpoint holds that the essence of payments lies not in settlement, but in circulation, which has given rise to some models similar to underground banks. These models are based on trust and relationship networks, creating a closed-loop funding ecosystem. However, although this model operates well in some gray areas, it is difficult to become a global payment infrastructure.

What truly drives Web3 payments from the margins to the mainstream is the support of U.S. policy layers for stablecoin payment networks. With the advancement of related legislation, stablecoins are being positioned as a "strategic payment infrastructure." Mainstream fintech companies are actively applying USD stablecoins in international settlements, merchant acquiring, and platform settlements.

This development trend indicates that the future of the encryption industry will be more integrated with traditional finance. Whether it is large financial institutions launching their own digital currencies or payment giants integrating on-chain payments, it shows that traditional finance is accelerating its entry into the on-chain world, and their standards are clear—compliance, transparency, and regulatory oversight.

The true future of Web3 payments is likely to be built on the foundation of dollar stablecoins and compliant settlement channels. This system can maintain the decentralized openness while leveraging the credit foundation of the existing fiat currency system. It allows for the free flow of funds, emphasizes identity abstraction without evading regulation, and integrates user intentions without stepping outside legal boundaries.

In this new payment ecosystem, funds can not only enter the Web3 world but also flow out freely; they serve not only on-chain financial activities but will also be deeply embedded in global goods and services transactions. This model retains the innovative characteristics of encryption while closely integrating with the economic system of the real world, opening up new possibilities for future financial development.