PayFi: the quiet upgrade transforming global finance

Sebastien Davies, VP of Research at Aquanow, explains what PayFi is and shows how it transforms the global payment infrastructure.

Throughout history, the ways we exchange value have evolved from bartering goods to swiping cards. Today, a new transformation is quietly underway. It’s not flashy, and it won’t make headlines like Bitcoin once did, but it might be just as significant. Some are calling it PayFi (short for Payment Finance), a term that reflects the integration of blockchain-based innovation with traditional financial systems.

At its core, PayFi modernises payments: making them faster, cheaper, and more accessible by using the best of both worlds.

Why this matters

We live in an age of contactless cards and instant mobile transfers, yet our financial infrastructure remains surprisingly inefficient in some areas. Consider international payments: wire transfers can take days, cost a fortune, and require layers of middlemen. PayFi solves these frictions using blockchain technology - settling transactions in seconds and dramatically lowering costs.

It’s also more inclusive. Over a billion people around the world still lack access to basic banking services. With PayFi, all that’s needed is a smartphone and an internet connection. That’s a game changer.

But what makes PayFi different from earlier crypto efforts is its collaborative posture. Instead of trying to replace banks, it works with them. Instead of building a parallel financial system, it connects the old and the new - bridging traditional payment rails with blockchain-native efficiencies.

Building blocks beneath the surface

While you don’t need to understand the underlying technology to benefit from it, it’s worth knowing what makes PayFi work.

• Stablecoins: these are digital tokens pegged to fiat currencies like the US dollar. They eliminate the volatility of cryptocurrencies while keeping the speed and programmability of blockchain intact.
• Smart contracts: self-executing programs that automatically carry out transactions when predefined conditions are met. Think splitting revenue among creators instantly, automating royalties, or releasing payment once work is delivered without the need for intermediaries.
• High-speed blockchains: modern networks can now process thousands of transactions per second, often for less than a penny.

Together, these tools enable financial products that are simpler, smarter, and more tailored to users’ needs.

What’s already happening

Although still early, PayFi is already showing up in places that matter. Merchants can now accept crypto payments while still receiving local currency. Cross-border workers can be paid in seconds instead of waiting days. And people in emerging markets are getting access to financial tools previously out of reach.

Perhaps most intriguingly, new financial models are emerging. Some platforms are experimenting with ideas like Buy Now, Pay Never, where yields from decentralized finance (DeFi) protocols cover the cost of a purchase over time. While not yet widespread, these concepts hint at just how flexible and creative programmable finance can be.

The role of banks and financial institutions

It might sound ironic, but some of the most promising developments in PayFi are coming from the traditional side of finance. Big banks and payment networks aren’t sitting still. They’re experimenting with how to plug into blockchain systems in order to reduce costs, reach new customers, and stay relevant in a rapidly changing digital world.

That’s where the real promise of PayFi lies. Rather than asking people to choose between the old system and the new one, it invites financial institutions and fintechs to upgrade what they already have. Familiar user experiences can be enhanced with blockchain behind the scenes - lowering fees, speeding up settlement, and opening up new services without disrupting trust.

In many cases, the best approach may not be to replace what works, but to quietly improve it.

Yield as a feature

Another powerful dimension of PayFi is its ability to incorporate yield directly into financial products. Today, banks earn interest on your deposits, but pass on very little to you. In a PayFi world that leverages software, yield becomes a feature that benefits the end user.

For example, a savings product could offer higher returns by automatically allocating funds into vetted, yield-generating protocols. A credit card might offer 3% cashback versus the current 0.4–1.2% because the infrastructure underneath is far more efficient. These innovations won’t appeal to everyone, and they come with new risks, but they demonstrate how different the economics can be when financial systems are rebuilt from the ground up.

Challenges ahead

PayFi isn’t without its hurdles. Regulations are still evolving. User experiences can be clunky. Critically, many people simply aren’t ready to take on the responsibilities of self-custody or managing private keys.
That’s why the partnership between innovators and incumbents is so important. Banks bring trust, scale, and compliance know-how. Startups bring speed, creativity, and new models.

Together, they can build something better than either could alone.

A practical upgrade

PayFi won’t be a revolution you see on the nightly news. But it might show up in your banking app, letting you send money abroad instantly. Or in your payroll system, helping contractors get paid faster. Or in your investment account, offering access to new asset classes with lower fees and more flexibility.

It’s not about tearing down the old system. It’s about quietly upgrading it.

PayFi may not change everything overnight. But it’s already changing enough to matter.

 

About the author

As VP, Research at Aquanow and Market Strategist at AQN Digital, Sebastien Davies focuses on industry analysis, investment management, and growth initiatives. He joined from CIBC Capital Markets, where he held roles in Institutional Equity & Derivatives Sales. Prior Thereto, Sebastien conducted research and risk management at a long/short hedge fund.

 

 

 

About Aquanow

Aquanow is a leading institutional digital asset platform powering fast-growing banks, neobanks, brokerages, and payment companies. The company operates technology infrastructure and underwrites billions of dollars in monthly crypto brokerage and payment transactions. Established in 2018, Aquanow employs over 125 team members across offices worldwide. In 2024, for the second consecutive year, Aquanow was recognised on the Deloitte Technology Fast 500 list, achieving a four-year revenue growth rate of 3,022%.