Blockchain & Digital Cash: Capturing Value in APAC Unbanked Payments

The Asia-Pacific region shows accelerating adoption of blockchain-enabled payments and digital currencies. Governments and regulators are linking national real-time payment systems (e.g. India’s UPI with Singapore’s PayNow) to enable 24/7 cross-border transferscircle.com. Many APAC countries are piloting or planning central bank digital currencies (CBDCs) – Asia has been dubbed the “CBDC capital of the planet,” with China’s e-CNY reaching nearly $1 trillion in use by mid-2024thebanker.com and multi-country initiatives (mBridge) for wholesale cross-border payments emergingthebanker.comundp.org. Meanwhile stablecoins and crypto are scaling: over 560 million people (~6.8% of the world) now own cryptocurrencytriple-a.io, with especially high penetration in Asia (e.g. 21% in Vietnam, 13% in the Philippines)triple-a.io. Circle reports that USD stablecoins already settled about $7 trillion in 2022 (versus $14 trillion on Visa/Mastercard networks)circle.com, highlighting blockchain’s massive potential. All these trends – ISO 20022 standardization for richer payment dataswift.com, CBDC research, and fast-growing crypto use – point to a wave of digital money rails that could tap into large flows of remittances, trade payments and retail transactions. For example, Asia-Pacific alone sees hundreds of billions in annual remittance flowsblogs.worldbank.orgmastercard.com and tens of trillions in trade (China exported $3.7 trillion in 2022mastercard.com), underpinning vast market size.

In this environment, value capture is greatest in cross-border payments and money movement. World Bank data show remittances to low-/middle-income countries will hit ~$685 billion in 2024blogs.worldbank.org, largely driven by Asian migrants (South Asia ~$207 billionblogs.worldbank.org). APAC consumers demand frictionless transfers: 49% report sending money abroad regularlymastercard.com and 84% would send more if it were fastermastercard.com. Yet many still lack digital channels. Emerging blockchain rails (stablecoins, CBDCs) promise near-instant, low-fee cross-border settlementcircle.comcorporatefinanceinstitute.com, suggesting that a solution enabling digital cash flows for the unbanked could seize part of this multi-hundred‑billion‑dollar opportunity.

Existing Solutions & the Unbanked Gap

Current fintech and payment providers excel at serving banked customers but often leave unbanked travelers underserved. Companies like Stripe, Braintree (Venmo/PayPal), Shift4, and Windcave focus on merchant payments and require bank or card connectivity – they don’t help a bankless person convert cash or crypto into spendable funds abroad. PayPal and its peers typically tie accounts to a bank or credit card, while remittance fintechs (Wise, Remitly, WorldRemit, XE, etc.) require senders to fund transfers via a bank account or debit card. Traditional money services (Western Union, MoneyGram) handle cash pickup but charge high fees and often involve slow agent visits.

In practice, many unbanked travelers rely on cash or prepaid travel cards. Prepaid cards can bridge some gaps – they require no credit check, provide ATM access and booking capabilityusio.comusio.com – but they often carry fees and still require a way to load money. For example, unbanked users may struggle to reload a prepaid card without a bank or may incur exchange/ATM charges. Studies show many unbanked households remain “cash only”fdic.gov, meaning even prepaid solutions have limited reach. As a result, unbanked migrants or tourists can face dangerous cash handling or predatory fees when abroad.

Moreover, digital wallets and apps designed for mobile finance (e.g. smartphone-based wallets, mobile money) have not fully penetrated this segment in outbound travel contexts. Although 68% of APAC cross-border transfers are done via smartphone appsmastercard.com, and 36% use digital wallets, the poorest and most rural travelers often lack smartphones or IDs needed to open accounts. At the same time, providers like Remitly explicitly target underbanked immigrantsbusinesswire.com and have grown by offering mobile remittances, but their services mainly remit to families back home – they don’t let the sender spend that money while travelling. In short, a gap persists: a low-cost, digital payment solution that non‑banked individuals can carry and use seamlessly on the go.

Lessons from Failures

Several past ventures have tried to solve related problems, with mixed success. One notable case was 37Coins (2015), which built an SMS-based Bitcoin wallet to reach the unbanked. Its innovative SMS architecture let users send Bitcoin via text even without internetsunsethq.com. Initially promising, it collapsed due to technical issues and competition: unreliable SMS delivery across carriers ruined user experience, and new competitors and changing market needs eroded its nichesunsethq.comsunsethq.com. The lesson is clear: ensure technical reliability and product-market fit. If a service depends on novel infrastructure (like SMS wallets), every link (carriers, networks) must work seamlessly at scale.

Another high-profile failure was Facebook’s Libra/Diem (2022). Libra aimed to be a global stablecoin to “provide a payment network for billions of unbanked people”corporatefinanceinstitute.com, cutting remittance costs. Despite deep pockets and major partners, it drew intense regulatory scrutiny. Governments decried its potential to sidestep banking controls, and privacy/money‑laundering concerns sank the projectcorporatefinanceinstitute.comproject-syndicate.org. Its shutdown shows that regulatory alignment and clear value-add are critical – even a vast network like Facebook’s can’t override central banks on currency issuance.

In general, failed fintechs teach us to avoid over‑engineering or ignoring the target user. 37Coins taught that ambitious tech (SMS-Bitcoin wallets) must match actual user connectivity; Libra taught that tackling core banking functions (money creation) triggers fierce pushbackcorporatefinanceinstitute.comproject-syndicate.org. Many small crypto startups failed simply due to mismanaging funds or lacking a clear business modelsunsethq.com. A new solution should therefore focus tightly on the unbanked traveler’s pain points (simple spending, safety, access) and work closely within regulatory frameworks (e.g. partnering with licensed issuers or complying with e-money rules).

Identifying a Market Gap

Given these trends and gaps, a clear opportunity emerges: a blockchain-backed travel payment platform tailored to unbanked (or underbanked) travelers. In practical terms, the target could be migrants and low-income tourists in APAC (e.g. rural Asians traveling to NZ/AU, Pacific Islanders, etc.) who have income (often in cash or informal wallets) but no bank account. These users need a way to carry “digital cash” internationally – for example, a stablecoin or e-currency they can load at home and spend abroad without using local banks. Current solutions partially address this (prepaid cards, crypto debit cards) but no single product seamlessly unites ease, low cost, and trust for this segment.

The gap, then, is the last-mile travel currency: an on-the-ground payment method that the unbanked can easily obtain (perhaps for minimal ID), top up (with cash or crypto), and use instantly in stores/online overseas. This idea leverages blockchain’s strength (global settlement) while solving the existing pain point (costly cash or cumbersome prepaids). For example, one could imagine a crypto-enabled travel card or wallet app that auto-converts stablecoins to local currency at merchants, or that peers directly with local mobile wallets via QR codes. Such a product would use ISO 20022-style standardized data across networks and could even integrate with new CBDCs (once deployed) to ensure liquidity and compliance.

In short, by combining blockchain rails (low-cost transfers) with consumer-friendly payment technology (cards/mobile wallets), a startup could unlock untapped value from multi‑billion-dollar remittance and travel spending flows. The Asia Pacific context (strong mobile usage, existing cross-border corridors, and high crypto interest) makes it especially ripe for a proof-of-concept in NZ/Australia before scaling to other Commonwealth and global markets.

Business Model Canvas (Draft)

• Customer Segments: Unbanked and underbanked travelers (e.g. migrant workers, students, low-income tourists) journeying between Asia-Pacific countries (starting NZ–Australia transits, then broader Commonwealth routes). Also secondary segments: local merchants and SMEs in destinations who want easy settlement, and diaspora families who send top-ups.

• Value Proposition: “Borderless digital cash for the unbanked traveler.” A secure travel wallet (card + app) that needs no bank account: users can load cryptocurrency or cash (via local agents/agents), hold it in stablecoin/digital form, and spend at any merchant with automatic conversion. Key promises: low fees, instant conversion, easy reload with cash, offline support, and high privacy/safety (no need for IDs beyond signup). Leverages blockchain transparency (real-time transfers) and optional CBDC rails for reliability.

• Channels: A mobile app (multi-language, for top-ups and tracking) and a physical payment device (card or wearables) co-issued via local partnerships. Distribution through travel agencies, remittance kiosks, mobile money agents, and possibly national ID registration centers (where unbanked might register for government benefits). Marketing via community networks (diaspora orgs) and tie-ups with airlines or tourism boards in NZ/AU.

• Customer Relationships: Onboarding with minimal friction: e.g. over-the-counter agent verification for unbanked users. Community-driven outreach (NGOs, migrant associations) to build trust. 24/7 digital support (chatbot/multi-lingual help) for travelers needing assistance. Education campaigns highlighting cost savings over traditional methods.

• Key Activities: Developing and maintaining the payment platform (wallet app, backend), integrating blockchain / stablecoin networks, and ensuring compliance (KYC/AML) in target countries. Designing/manufacturing the hardware (if any) and managing card issuance and network connectivity (e.g. Visa or local switches). Building partnerships with banks or payment providers for fiat on/off-ramps. Ongoing user acquisition and retention efforts (referrals, loyalty programs).

• Key Resources: Blockchain infrastructure (e.g. node/ledger access to a chosen stablecoin or CBDC network), a technology team (blockchain developers, mobile engineers), secure hardware design (if issuing a proprietary card/wallet), plus licenses (money transmitter, e-money licenses in NZ/AU and target nations). Strategic assets include any patents on the device or conversion mechanisms, and a secure KYC platform optimized for minimal ID (possibly leveraging NZ’s digital identity frameworks).

• Key Partnerships: Major collaborators would include: (1) Regulators and banks – to license the service and tie into fiat rails; (2) Card networks/payment processors – for merchant acceptance (Visa/Mastercard or local schemes); (3) Blockchain/stablecoin issuers – e.g. Circle (USDC), or eventually CBDC authorities; (4) Telecoms and agent networks – to allow cash-loading and device distribution (as fintech enabled by mobile money agents); (5) Local fintechs and remittance firms – potential integrations with Wise/Remitly for user referrals. Also, government tourism bodies (NZ Immig./Tourism NZ) could help promote the solution to incoming travelers.

• Cost Structure: Major costs include R&D (tech and hardware development), regulatory compliance (licensing, auditing), manufacturing (for cards/devices), and marketing/distribution. Transactions will incur network fees (blockchain or CBDC usage fees, interchange fees). Customer support and platform maintenance add ongoing costs. If hardware is produced, managing inventory, logistics and warranty costs must be covered.

• Revenue Streams: Revenue could come from a small transaction or currency conversion fee on payments (e.g. <1%), spread over daily volumes. A one-time issuance fee for the card/device is possible (though minimal to avoid barriers). Other streams: ATM cash-out fees (if applicable), subscription for premium features (higher limits, rewards), and B2B income from merchants (e.g. offering merchant settlement in stablecoin for lower fees). Potentially government subsidies or grants might be available for a solution that demonstrably aids financial inclusion in APAC.

Implementation Path: Software vs Hardware vs Integrated

Several approaches could capture this value:

• Software-Only (Digital Wallet App): Develop a mobile app (iOS/Android) that holds crypto/stablecoins and integrates with existing payment rails (e.g. tokenized card in smartphone wallet, QR payments). This minimizes hardware investment and leverages ubiquitous smartphones. It could use simple NFC or QR payments with merchant cooperation. Pros: Low upfront cost, rapid deployment, easy updates. Cons: Relies on users having smartphones and internet; potentially higher churn and competition (many wallet apps exist). It also limits patentability. An example path: Launch as an “app-first” offering targeting tech‑savvy unbanked travelers, then optionally issue a linked physical card.

• Hardware-Integrated (Card/Device): Issue a purpose-built payment device (smartcard or crypto hardware wallet) that functions offline and is branded (leveraging NZ’s design). It could store keys and enable offline transactions (like storing some e-cash for micropayments) or connect at POS to spend on-chain. Pros: Differentiable product, can patent hardware designs (e.g. a novel card that also holds identity credentials). Appeals to users who prefer physical cards. Cons: High manufacturing and inventory costs, slow iteration, and risk of obsolescence (smartphones advance faster). Distribution can be challenging for reaching the unbanked. NZ as a device manufacturer adds credibility (e.g. “Made in NZ” on secure hardware).

• Vertically Integrated (Card + Platform + Service): Combine both: develop an integrated product line (e.g. a branded “travel wallet kit” with app + card + optional wearable) and operate the entire payment ecosystem (fiat gateways, customer support, marketing). Pros: Full control of user experience and higher margin (all layers captured). Cons: Very capital-intensive and complex to execute globally, requires building or acquiring partnerships at every layer. This path makes sense only if a truly unique device is in play (to justify patents) and if the startup can raise significant funding.

In practice, a staged approach might be best: begin with a software-centric model (mobile wallet + plastic card via partner issuer) to validate demand and build scale, then iterate into more hardware features once market fit is proven. Central bank research suggests that both hardware and software wallets are important for inclusionundp.org (offline/low-tech users need a physical option). For instance, the BMC noted that easily accessible hardware wallets can widen reachundp.org. If a low-cost, rugged travel card or POS dongle can be designed, NZ’s tech sector could prototype it (drawing on NZ’s “clean, safe” brand image).

Ultimately, software reduces barriers to entry, while hardware can command loyalty and IP protection. A hybrid model – an app plus optional physical prepaid card – may capture the most value: users get convenience, and the company secures a unique hardware channel. The final choice should align with cost constraints and user preferences uncovered in market testing. Regardless, the solution must seamlessly integrate blockchain or CBDC rails so that sending and spending “digital cash” is as simple as swiping a card or tapping a phone – finally giving unbanked travelers the financial toolkit to pay and transact safely wherever they go.

Sources: Industry reports and news on blockchain, CBDCs, and payment trendscircle.comundp.orgcorporatefinanceinstitute.commastercard.comblogs.worldbank.orgtriple-a.iobusinesswire.comswift.comthebanker.comsunsethq.com, along with case studies (37Coins, Libra)sunsethq.comcorporatefinanceinstitute.com and solution analyses (prepaid cards, Remitly)usio.combusinesswire.com.