In episode 17 of Money Code, hosts Chuk Okpalugo and Raj Parekh invited Jess Houlgrave, CEO of WalletConnect, as a guest.

Article author and source: Payment 201

Taking Ingenico's latest collaboration as a starting point, they delved into what is truly needed to scale up stablecoin payments at physical point-of-sale (POS) locations: including incentive mechanisms that can genuinely change merchant and consumer behavior, compliant routing capabilities from on-chain to fiat currency, user experience design that approximates the Web2 experience, and how privacy constraints affect whether merchants and consumers are willing to choose on-chain settlement.

Jess Houlgrave:

You can lead a horse to the water, but how do you get it to actually drink? It's like you can show someone "you can pay with cryptocurrency," but how do you actually get people to use cryptocurrency to pay? I think that's actually more challenging in some ways: how do we get the world willing to pay for goods and services on-chain? That might be the tougher nut to crack.

Chuk Okpalugo:

This is Money Code. We break down stablecoins and programmable money in our show. I'm Chuk Okpalugo, and I'm co-host Raj Parekh.

Raj Parekh:

Today we have with us Jess Houlgrave, CEO of WalletConnect. Jess, welcome to the show!

Jess Houlgrave:

Thank you so much for the invitation! I'm very excited to participate.

Chuk Okpalugo:

I'm particularly excited for today's episode because we'll be leveraging WalletConnect's recent collaboration with Ingenico to break down what's really needed for stablecoin payments to scale at physical checkouts. This is a big deal. We'll be looking at both the supply and demand sides. If this system works, it will become a true bridge from crypto payments to mainstream commerce. But there are some less obvious but crucial hurdles to overcome—and that's what we'll be digging into today.

Raj Parekh:

Before we begin, a brief disclaimer: Money Code is produced by Stablecoin Media and supported by BVNK. The views expressed by the host and guests are solely those of the individuals and do not necessarily represent their respective companies. Nothing discussed today constitutes investment advice.

1) What is WalletConnect? What exactly does the Ingenico collaboration "deliver"?

Chuk Okpalugo:

First, let me give you some background: Could you briefly introduce WalletConnect? Then, could you talk about the recent announcements with Ingenico—what exactly was launched/delivered?

Jess Houlgrave:

WalletConnect has been around since around 2018. I joined about two and a half years ago. The origin of WalletConnect is that people started having mobile encrypted wallets, and at the same time, many desktop applications wanted to interact with them—perhaps the NFT market (especially common in 2018), or perhaps DeFi protocols, games, or other applications.

It later grew into a network with over 700 different wallets connected to it. These wallets included not only the initial mobile wallets, but also hardware wallets, custodians like BitGo, and institutional-grade solutions like Fireblocks. On the other side of the network are approximately 70,000 different applications, all available across blockchains. You can think of it as a kind of "invisible messaging" that occurs off-chain between apps and wallets, ultimately triggering on-chain transactions. Last year, these connections facilitated approximately $400 billion in fund/value transfers (between apps and wallets).

Additionally, we noticed a trend last year: more and more payment companies began integrating with the WalletConnect network. The reason is intuitive—they want to be able to receive payments from all crypto wallets. It's like you wouldn't say, "I only accept Visa, not Mastercard," or "I only accept HSBC payments, not Barclays/Lloyds/other banks." Everyone wants to receive payments from all wallets, so many payment companies are integrating with us because we offer this broad coverage capability.

However, we also found that while it works, it doesn't feel like a payment experience; it feels more like a "crypto experience." End users need to "connect their wallets and sign transactions"—this is very familiar if you're used to DeFi transactions; but if you're someone walking into a store to pay, this doesn't feel right, you just want to click "pay."

So we partnered with Ingenico to create WalletConnect Pay: the core of which was redesigning the end-user experience to achieve what I call "UX parity with the Web2 payment experience" over time. At the same time, we were building the infrastructure our payment partners needed: they didn't need to learn about encryption or worry about complex details like blockchain configuration—we managed it for them and provided fiat currency settlement to merchants in the backend.

A few weeks ago, we announced our partnership with Ingenico: we hope to reach approximately 40 million terminals in the market over time—meaning that anyone with a wallet could theoretically make cryptocurrency payments in stores. The product also supports online payments, and we have several e-commerce partners in the queue for integration. Our goal is to truly get the end-to-end crypto/stablecoin payment process running smoothly.

2) Offline coffee shop case study: How do users pay? What do merchants receive?

Raj Parekh:

That's cool. I worked at Visa for a long time and know how incredibly difficult merchant acceptance is. You guys are a huge breakthrough. I think I saw you recently posted an example of a Portuguese café. Could we break it down into a "step-by-step experience": What did you unlock in that café? What does the transaction experience specifically look like? What do merchants hope to see from it?

Jess Houlgrave:

You're referring to 94 Degrees café in Portugal—which has probably become the "most famous café" in the crypto world in the last two weeks. It's one of our partners, used to test these new user experiences. They gave us a lot of feedback from a merchant's perspective: what merchants actually want to receive and how to make it smoother.

On their end, we've actually opened up more asset types, not just stablecoins—customers can also pay with native assets like ETH or Solana. We've seen that about half of the transactions at the coffee shop are completed using these native assets, which is quite an interesting statistic. Operationally, any wallet user compatible with WalletConnect can enter the store. If you tell the staff you want to pay with cryptocurrency, there will be a sticker indicating "We support crypto payments with WalletConnect Pay." And on their same POS terminal, the step that would normally initiate a card transaction has been replaced by displaying a QR code.

This QR code contains complete payment context information: the amount due, acceptable asset and blockchain combinations, etc. The user experience after scanning the code may vary slightly depending on the wallet used.

If the wallet is upgraded to our new "Payment Experience SDK", users will see a very simple process that can be completed with just a few clicks;

If your wallet is still on the old version of the WalletConnect wallet kit, the process will be slightly different.

We hope that within the next six months, almost all wallets will upgrade to a more payment-native experience, bringing a smoother on-device experience: users tap "pay," and the transaction is complete. For users, you'll hardly notice any difference. For merchants: they pay lower fees (no longer the card organization fees), settlement is almost instantaneous, and they can reach a broader customer base "willing to buy things with cryptocurrency."

3) Once the on-chain process is complete, how does the money transfer to the merchant's bank account? Why is a "Transit Account" necessary?

Chuk Okpalugo:

Let's continue with this example: What happens after an on-chain transaction is completed? For example, whose wallet does the stablecoin or ETH end up in? The merchant? The payment service provider? Or some other entity? And how does the money become cash in the merchant's bank account?

Jess Houlgrave:

The specific structure may vary depending on the region and certain restrictions. For example, WalletConnect does not have its own payment license, so we will cooperate with licensed and compliant partners to ensure that the entire process is compliant.

From a high-level perspective, you can think of funds as first going into what we call a Transit Account. This is to provide a layer of protection: because on-chain, you can't control "who sends you money," and even if we do pre-screening, we can't guarantee 100% that malicious addresses—such as sanctioned addresses—won't send money. That's how it is on-chain: if someone wants to transfer money to you, it's very difficult to completely stop them at the protocol level. So, funds first go into the Transit Account, where we conduct more checks, and then through our regulated partners, we perform off-ramp (withdrawal/redeem) to convert the funds into fiat currency.

For fiat currency transactions, we usually aggregate and package them: instead of sending you 20 fiat currency inflows in one day (of course, if someone specifically wants immediate settlement, we can do that too), we generally aggregate them and settle the money into the merchant's bank account at the end of the day.

The key point is that settlement time will be significantly shortened (depending on the region, of course). Card settlement usually takes 1-2 days, and in some places it can even take up to 30 days—for example, I've heard that in Brazil it's T+30. So in many regions, this makes a big difference: merchants can generally see the money in their bank accounts before the end of the day.

Chuk Okpalugo:

This example perfectly illustrates the roles of different participants in on-chain payments. A key point you mentioned is that you can't control the sender of assets on-chain, so an intermediary account is needed to screen them before proceeding to the next step—this is a "detail pitfall" that on-chain payments must handle.

4) Supply side: To get the end users to support this process, what do the acquiring party/merchant/Ingenico each need to do? What are the incentives?

Raj Parekh:

Now we can delve deeper into what's missing to make this system more mainstream. Everyone's excited about scale, distribution, and Ingenico's reach—it's practically everywhere globally. You also have the distribution potential of the "700M Wallet" on the consumer side. But there's still a lot to do. Let's start with the supply side: what do the acquiring party and merchants each need to do to support this process? What incentive mechanisms are available?

Jess Houlgrave:

You're right, this is just the first step, and global distribution is still a long way off. Ingenico has different go-to-market routes: sometimes it works directly with merchants, and sometimes it provides services and hardware to acquiring banks. So the specific "who's involved" will vary depending on the path. But in the current process, usually the merchant, the acquiring bank, and of course Ingenico, all need to agree: "We want to support encrypted payments in stores."

Merchants currently need to go through an onboarding process to ensure they meet the requirements of our off-ramp partners, hence the onboarding procedure. The motivation for merchants to activate this feature will vary significantly depending on the merchant type and region.

In some areas, businesses are surrounded by international residents/digital nomads, and they want to support encrypted payments.

In some places, merchants are migrating some transactions from the card track to the alternative track in order to reduce payment costs;

In some places, your credit card limit will be "maxed out," such as at luxury stores and high-end nightclubs—imagine you're in a cool nightclub and a bottle of champagne costs $120,000; that would quickly trigger your card limit.

Therefore, the motivations are diverse. Overall, the core economic benefits for merchants are still twofold: lower fees and faster settlement. Other benefits may exist, such as "looking cooler," but the core remains fees and settlement.

On the acquiring side: Acquiring parties can charge acquiring fees on top of WalletConnect Pay, just like they do for other payment methods. Different acquiring parties have different models: some charge a fixed fee for APM (Alternative Payment Method), while others add basis points. However, acquiring parties can treat this as a similar decision to "enabling a certain APM": they can still charge fees and bring potential benefits to downstream merchants.

Furthermore, a relatively "neutral" aspect for the acquiring party is that they don't need to learn encryption or bear any additional operational burdens—because we manage the chain configuration and encryption details. It would be much more complicated for them to do it themselves. Ultimately, merchants reap the benefits mentioned earlier.

Chuk Okpalugo:

To add to that: APM stands for "Alternative Payment Methods," such as electronic checks, various bank transfers, pay-by-bank, etc., which are all common payment methods today.

5) Which merchants would be more "naturally" interested? Which regions would be easier to promote this initiative in?

Raj Parekh:

Returning to your "champagne" example—in the data you're seeing now, are there any particular types of merchants who are more naturally attracted? Like, they might feel, "This is a must-have for us," because users have consistently expressed this demand. You mentioned luxury goods/nightclubs; I'd like to know which other merchant groups you anticipate will be more interested?

Jess Houlgrave:

Luxury goods are indeed a category: they have a large international customer base, especially luxury hotels/travel services where cross-border processing is more expensive. Everyone knows that cross-border card fees are higher, so these merchants have stronger incentives.

Another category is regions with high crypto holder penetration. For example, in Latin America, we see more and more people wanting to hold crypto assets, especially stablecoins, often to gain exposure to the US dollar and reduce their local currency risk. In many South American countries, QR codes are also a familiar payment method, so the switching cost for users to "scan to pay" is lower. In these places, we see a strong willingness, and it's not necessarily for large transactions—many are small, everyday payments like buying coffee or ice cream.

Therefore, this matter is highly dependent on geographical environment: payment habits and motivations vary greatly in different regions.

6) Operations and Reconciliation: How should merchants/PSPs handle reconciliation, reports, and refunds?

Chuk Okpalugo:

From an operational perspective, what differences do merchants need to make in terms of reports and reconciliation? For example, how do they track "encrypted payments" and traditional fiat currency payments? And how is the refund process handled?

Jess Houlgrave:

Our goal—though still in its early stages—is to deliver these capabilities in a way that PSPs are familiar with: we can provide the same reconciliation and reconciliation data as other APMs, and offer tools such as merchant dashboards. Not all features are as "complete" as mature APMs right now, but the goal is that PSPs won't need to do anything "different" from what they've done before; we'll integrate it into their existing systems.

You mentioned refunds: We have a refund process. However, it's a bit more complicated today because PSPs typically don't hold their own stablecoin balances, so refunds often require an on-ramp deposit before processing, adding extra complexity. But we can manage this. We'll try our best to achieve two things:

1) Explain it in language that the payment industry understands (for example, instead of telling them "you need to be on-ramp," we say "you need to complete the fund settlement," and then we handle the refund process in the background).

2) Become so familiar with the product that the requirement of "must understand encryption" is removed to the greatest extent possible.

Ideally, merchants/PSPs should be able to unlock this capability without changing their existing operational processes. Reducing friction is key to adoption.

7) Adoption and Incentives: B2B is very rational, but how can B2C really get people to change their behavior?

Raj Parekh:

You mentioned earlier that the B2B market is very rational, with everyone looking at ROI, efficiency, and profit margins. What about B2C? How do you drive adoption among consumers? Is it through incentives? Or is there simply a segment of the population who naturally need it? How do you drive adoption through acquiring clients, merchants, and consumers? Are there corresponding incentive mechanisms?

Jess Houlgrave:

We didn't push anything beyond the benefits I described. Most businesses, especially B2B, are rational: they want to know "can I save money/make money," or if there are strategic reasons. For example, some European companies wanting to reduce their dependence on the US might be more willing to consider alternative payment methods. We position this system "just like any other APM."

Some less interesting data points also arise: one of our payment partners (who already supports crypto payments) observed that users paying with crypto have significantly higher basket values, roughly 10%–15% higher, even after controlling for almost all other buyer attributes. We don't yet have millions of data points to rigorously verify this, but from a merchant's perspective, this is a very interesting signal: your customer profile may change, and you may achieve higher basket values.

Acquiring parties also want differentiation, providing the payment methods that merchants prefer. Different acquiring parties vary greatly: if you focus on gaming or high-risk industries, where card approval rates are low, you might be more motivated to integrate these APMs; if you're in local retail, the risks and needs are a different story. Therefore, you need to consider all factors: who the merchants are, who the end consumers are, and how these payment methods are integrated into your payment portfolio.

But you raised a very crucial question: "How do you get a horse to drink water if you lead it to the water's edge?" You can let people know that "you can pay with cryptocurrency," but how do you get people to actually use it? That might be the more difficult side: how do you get the world willing to pay for goods on the blockchain?

Chuk Okpalugo:

That's a perfect introduction. Let's talk about this next. I also think this part is even more interesting: how exactly is consumer behavior changing? Many people's first reaction is Apple Pay, Google Pay, Tap to Pay, but the world isn't just about those. You also mentioned QR codes. So how exactly do you think about "changing consumer behavior"? Is that your goal? Or are you starting with "people with essential needs" and then working backward?

8) Consumer side: First, target markets with strong demand and complete the UX form factor (QR/NFC), but "smooth" does not necessarily mean "willing to switch".

Jess Houlgrave:

We will prioritize markets where there is inherent "pull"—whether from users or merchants. If a user or merchant already has a perfect payment solution, congratulations, they don't need us, and that's fine too. We want to serve those who are genuinely motivated to drive this.

There are several layers here: the first layer is the "payment action itself." Does it feel familiar? We've upgraded to the new SDK through our wallet partners, making the experience more like a payment process than a DeFi transaction. But it doesn't quite feel like a Web2 payment yet—it will be closer in some regions.

For example, in Southeast Asia, QR code payments have a high penetration rate. "Taking out your phone, opening the camera, and scanning the QR code" is very natural, so the education cost is low. It's also familiar to many crypto users because you may have scanned WalletConnect's QR code in the DeFi or NFT market.

However, this doesn't cover a wider range of people: for example, many stablecoin wallet users who acquire them through neobanks today may not be familiar with QR codes. We are also working on NFC; I can't promise a specific timeline, but we hope to "meet users where they are," giving them a familiar payment experience—bridging the UX gap.

However, even if the experience is identical, it doesn't guarantee users will switch. This leads to the second layer: even if the experience is the same, how do I actually get you to change? How do I get Raj to say, "I want to pay with my crypto wallet," when he's online or offline?

We know many users are already looking to "pay with crypto assets" because stablecoin cards have seen massive volume—I recall it growing about 22 times in the last 16 months. This is great for users: you can spend your stablecoins. But it's also a bit like "sprinkling some glitter on an old, cumbersome system"—because essentially, you're just off-ramping crypto assets back into the fiat currency system, still going through the traditional card process, and there's no end-to-end on-chain advantage for merchants. So I think crypto cards are a great innovation, but they're more of a transitional step. The ultimate form should be that merchants can also truly complete settlements end-to-end with on-chain payments.

So how do we get you to "switch to it"? We need to innovate and experiment with many partners. With this launch, we announced a starting point: cashback for end users. During the initial launch phase, users will receive 2% cashback on transactions (I believe there's a monthly cap). This might encourage you to try crypto payments.

We also provide incentives for wallets: if you look at the card's exchange model, the card issuer will receive a share of the fees—we're doing something similar here, providing wallet partners with an "on-chain exchange."

Many payment partners—whether stablecoin payment providers or PSPs—are also willing to offer incentives because they want to reduce merchant costs: if you're a merchant with high card penetration, you'd be willing to change user behavior to get lower fees. You might be willing to offer a 5% discount to returning customers, incurring a small cost to drive the "first switch"; once the behavior changes and becomes more sticky, users will use crypto payments every time they come back. We've also seen some merchants very interested in discounts, cashback, and other methods to drive behavioral change.

9) "On-chain exchange" and longer-term fee flexibility: By eliminating off-ramp, merchants may be able to directly manage their assets on-chain.

Raj Parekh:

I was originally going to ask about the interchange model. You also worked in the payments industry for a long time before joining WalletConnect. Interchange varies across different regions and products, but it does give you "distributable profit margins," allowing you to share revenue among different participants. It's interesting that you're trying to replicate this model now.

I have another question: Where will the money saved ultimately come from and how will it be allocated? Will it be used as customer acquisition costs? Or, since on-chain transactions are programmable, is there a chance to "programmatically" distribute a transaction to different participants? I know this might be a bit far-fetched, but I'm curious about your initial thoughts.

Jess Houlgrave:

We are open to and interested in these ideas. Initially, we aim for a lower overall cost than cards, so we don't have the "absolute scale" of exchange space available with cards. In this case, token-based incentives might be interesting: for example, offering users more rewards using certain partners' native tokens. We are also brainstorming with some partners.

The key point is: the more links that can be connected end-to-end on the chain, the lower the cost will be, while still retaining some incentives.

For example, merchants' current total costs include "fiat currency off-ramp" costs because most merchants ultimately need to deposit fiat currency into banks. But I believe that in 10 years, or even sooner, many merchants will move their treasury management on-chain: they will hold stablecoins for daily operations and even use stablecoins to pay their employees' salaries.

Once you eliminate the off-ramp link, you can save even more costs. Some of these savings can be passed on to merchants/users, while the rest can be used to continue building the incentive flywheel, driving more people to switch. Of course, this is still very early, and we need to conduct extensive experiments. But a very positive point is that in the past few months, working with partners like Ingenico, we've seen a very strong willingness within the industry to make this happen. It won't happen overnight, but everyone is very willing to participate and experiment—something that was difficult to achieve before.

10) Who benefits the most? Merchants benefit most directly from economic gains; the benefits of consumer self-governance on the blockchain are more difficult to quantify.

Chuk Okpalugo:

Does this willingness primarily come from merchants? Are merchants the ones who benefit the most?

Jess Houlgrave:

That's a good question. From a purely economic perspective, you're probably right: faster settlements and lower fees directly benefit merchants. For some large retailers, whose profit margins are already very thin, saving two or three, or even four or five basis points, can significantly impact their profits.

However, I also believe that consumers will gain significant value in a more blockchain-based future: they will be able to own and self-manage assets, and use them directly without having to return to the traditional banking system. These benefits are harder to quantify directly with economic indicators, but they are likely very real. Different participants will have different benefits, but from a purely economic perspective, merchants will indeed benefit the most.

Chuk Okpalugo:

I've also spoken with some merchants, and their thinking is: we want to support as many payment methods as possible to avoid situations where "customers want to buy but we can't receive payment," so you'll see some checkout pages crammed with all payment methods. It may not be optimal, but this motivation certainly exists.

Furthermore, this initiative may need to rely on the merchants who "profit the most" to drive it, and may even need to be combined with membership and loyalty programs to change behavior. Consumers will also be bombarded with various incentives: many neobanks are currently offering massive benefits. Consumers may think: I'll use whoever offers the most compelling incentives. Merchants need to find the best path for themselves.

I also want to ask about a growing "elephant in the room"—privacy. As more and more offline/online payments are put on the blockchain, people worry about traceability and verifiability. What are your thoughts on privacy issues, especially regarding offline payments?

11) Privacy: Both consumers and merchants need it; in the short term, it relies on "address rotation/obfuscation," and in the long term, it relies on privacy solutions and privacy networks; providing users with "selectable chains."

Jess Houlgrave:

Privacy is very important, for both consumers and merchants.

For consumers, nobody wants their credit card statements to be publicly visible—what they bought, where they bought it, and how much they spent. Similarly, we don't want on-chain transactions to be completely public like that. We can do things at the operational level, such as rotating backend addresses, to "obfuscate" some connections, but unfortunately, many blockchains today are completely public and inherently lack privacy, so certain connections will exist in a public form.

However, I think there's some great innovation happening in the privacy space, depending on which ecosystem you're in. Solutions like Railgun, and many others (which I won't list), are very interesting and could help make future on-chain payments more private.

There are also some "native privacy" networks emerging, such as Canton. I can imagine: if you had a choice at the checkout—you have some USDC on Canton and some on Base; when you make a purchase at a particular merchant, you might prefer Canton over Base. For us, we want to give users that choice. I definitely see that privacy will become increasingly important.

The same applies to merchants: especially publicly traded companies, you don't want to publicly disclose your wallet address online, allowing everyone to estimate your revenue—you can imagine how much of a headache that would be for the SEC. Therefore, as more processes remain on-chain, we must pay more attention to privacy.

Several people on the WalletConnect research team are also dedicated to this, and it's something we consider top of our minds. We'll be presenting some playable Proof-of-Concepts (PoCs) at the next WalletCon (our ecosystem's biennial conference)—at the end of this quarter. We'll share more progress then. Privacy is indeed a crucial point.

12) Conclusion: The future form is "smooth like Web2," and users don't need to care which chain the underlying settlement is on.

Chuk Okpalugo:

The points you mentioned are all excellent: different privacy chains, different privacy implementations; some people use stablecoins, some use native assets; different types of wallets (self-custody, neobank); and payment methods need to reach Web2 levels. The list of areas to be filled is long, but the path is already visible.

Imagine a future where you can walk up to any device, pull out your phone, tap it with Apple/Google, and payment is deducted from your account. A provider handles the authorization and payment process behind the scenes; users simply need to ensure they have funds or credit in their account, and everything works. Whether the final payment is processed on Canton, Seismic, Aleo, or another network is irrelevant—it should "work automatically." I think that's the future we envision.

Okay, we're almost done for today. Jess, you've broken all this down very clearly. Where can people learn more about you and WalletConnect?

Jess Houlgrave:

My LinkedIn and X accounts are all under the name @houlgrave. Our company's LinkedIn and X accounts are all under the name @walletconnect. You can follow our updates there. We'd love to hear your feedback, ideas, collaboration requests, or anything you'd like to promote.

Raj Parekh:

You can also find me on X and LinkedIn: @rajparekh, and mono.xyz.

Chuk Okpalugo:

My contact information is stableblueprint.com, my LinkedIn profile is Chuk Okpalugo, and my X profile is @chuck_xyz. Jess, thank you for visiting!

Jess Houlgrave:

Thank you so much for the invitation! That's fantastic.