Author: Stacy Muur Translation: Shanooba, Golden Finance

Although Bitcoin and Ethereum have pioneered digital payments, their slow speed, high costs, and large price fluctuations make it difficult to achieve mainstream adoption.

We rarely see anyone using BTC or ETH to buy coffee or pay rent, and the reason is simple: high transaction fees, slow settlement times, and price volatility make it difficult for everyday payments.

Stablecoins (such as USDC and PYUSD) have improved payment efficiency, but have not yet fully realized the time value of money, or achieved seamless integration with traditional finance.

This is where PayFi comes into play. It connects DeFi, real-world assets (RWAs), and on-chain credit, making payments instant, efficient, and scalable.

PayFi: A New Model of Financial Payment

PayFi (Payment Finance) is an innovative financial model that integrates traditional payment systems with decentralized financial services through blockchain technology to enhance the efficiency, transparency, and accessibility of financial transactions.

Core Value Proposition of PayFi

PayFi's core concept is the Time Value of Money (TVM), which means that money today is more valuable than the same amount of money in the future due to its potential for appreciation.

In other words, would you rather have $100 today or $100 in one year?

Most people would choose to have it today, as this money can be invested, staked, or generate returns, while the future $100 may depreciate due to inflation and opportunity cost.

How does PayFi release the time value of currency?

Traditional finance traps capital in slow-moving systems. **Delayed settlement, illiquid assets, and rigid credit structures hinder the effective operation of funds, causing bottlenecks for individuals and businesses. PayFi aims to change this situation by enabling real-time transactions, automatic lending, and instant access to future cash flows to keep liquidity flowing.

Whether it is transforming the 'buy now, pay later' model into a revenue-generating model, helping businesses access funds from unpaid invoices, or enabling creators to receive income instantly, PayFi is making the financial system more flexible and efficient. By connecting DeFi, risk-weighted assets, and on-chain credit, it ensures that funds are not idle but actively working.

Buy Now, Pay Now (BNPN): Beyond Debt-Driven Consumption

BNPN has redefined the way people consume by replacing the debt model with expenditure based on earnings. Users no longer need to borrow and repay in installments, but instead pledge assets and use their earnings to cover expenses. The principal remains unchanged, allowing users to consume without borrowing.

Before PayFi:

Traditional "buy now, pay later" (BNPL) services may seem convenient at first, but they rely on credit and debt. Users often face hidden fees, interest, and late payment penalties, causing the cost of consumption to increase over time. Moreover, a single missed payment may impact credit scores.

With PayFi:

BNPN allows users to pledge assets and use the generated income to pay for consumption. Users can enjoy the benefits of consumption without taking on financial burdens for repayment. No interest, no overdue fees, no impact on credit scores—a smarter, more sustainable way of consumption.

Accounts Receivable Financing (ARF): Solving the cash flow dilemma for enterprises

For businesses, waiting for customers to pay can be a major obstacle to operations. ARF allows businesses to convert unpaid invoices into real-time capital, ensuring a stable cash flow without relying on expensive loans or credit limits.

Before PayFi:

Businesses often have to wait for weeks or even months to receive payments from customers. This delay increases the difficulty of operational management, making it more challenging to pay salaries and invest for growth. Many businesses have to rely on loans or credit lines to fill the funding gap, thereby increasing additional interest costs.

With PayFi:

Accounts Receivable Financing (ARF) enables businesses to tokenize invoices and instantly access working capital. Instead of waiting for payments to be received, businesses can convert unsettled accounts receivable directly into funds, ensuring smooth operations and reducing reliance on traditional financing.

PayFi Overview

Imagine PayFi as a **multilayered financial cake, with each layer playing a crucial role in making decentralized payments faster, more efficient, and more scalable.

1. Application Layer (Front-end Experience)

You can think of it as the applications you use every day, whether it's a payment platform, lending services, or a DeFi wallet. These companies are building real-world user experiences on the basis of PayFi technology.

This is where users, businesses, and financial applications connect to PayFi. From DeFi lending to cross-border payments, this layer makes PayFi usable.

The following projects embed blockchain payments into the daily financial field and realize real-world applications.

• Stripe makes it easier for businesses to accept encrypted payments while remaining compliant with traditional finance.
• Rain and ReapGlobal focus on simplifying cross-border payments to address the inefficiencies in global transactions.
• Arf is bridging instant credit with stablecoin-driven trade finance.

Other well-known players include Bitso, Sanctum, Sphere, Kulipa, Fonbnk1, etc.

2. Financing Layer (Fund Driver)

This is the real magic of PayFi - liquidity providers, credit markets, and financial tools are all here. These protocols can help users unlock funds in real time, borrow and lend funds.

If PayFi is a car, then this layer is the engine - pushing funds to where they're needed in seconds, not days.

Some of the pioneering entities in this field include:

• Huma is the first to launch loans for future cash flows, allowing businesses and individuals to borrow based on expected returns.
• Credora makes risk assessment more transparent and actionable, providing the confidence needed for lenders, borrowers, and ecosystem participants to make informed decisions.

3. Compliance Layer (Supervisor)

Cryptocurrencies still need security and compliance, which ensures the safe and legal flow of funds. The company here focuses on fraud detection, KYC, AML, and regulatory risk management.

Due to unclear regulations, the adoption speed of PayFi will slow down. These platforms help connect DeFi with real-world regulations.

• Chainalysis helps track blockchain transactions, prevent fraud, and ensure that PayFi operates in a legal environment.
• TrmLabs focuses on real-time risk monitoring to help institutions and regulatory bodies ensure the security of financial transactions.
• Polyflow is a PayFi protocol that connects real-world assets to DeFi through modular, compliance-friendly encrypted payment infrastructure.
• Elliptic - a blockchain analysis company that provides risk intelligence, compliance solutions, and fraud detection for cryptocurrency businesses and regulatory agencies

4. Escrow Layer (Digital Safe)

This layer provides secure storage for assets, ensuring that institutions and individuals do not lose funds due to hackers or mismanagement. It can be seen as the cryptocurrency equivalent of a bank vault.

Large institutions need a secure way to hold funds before entering the PayFi market.

• FireblocksHQ is one of the largest brands in the digital asset security field, providing enterprise-grade custody solutions.
• Copper & Cobo focuses on multi-party computation (MPC) security to help institutions securely manage assets.

5. Currency Layer (The Currency Itself)

This layer supports actual trading, effectively transferring value across borders using stablecoins and digital assets.

If there were no digital currencies, PayFi would not exist - stablecoins ensure fast, cheap, and borderless transactions.

USDC and PYUSD (Circle and PayPal) are regulated stablecoins, making PayFi trading more reliable for businesses and financial institutions.

Tether (USDT) remains the most widely used stablecoin, ensuring liquidity in global markets.

6. Trading Layer (L1/L2 Blockchain Infrastructure)

The base layer that makes it all possible. Here, transactions are processed, verified, and settled at lightning speed.

The faster and cheaper this layer is, the better PayFi performs. That's why high-speed blockchains like Solana and Stellar are in a leading position.

This chart is not only a detailed analysis of the company, but also a snapshot of the future of decentralized finance. PayFi connects traditional finance and DeFi, making payments instant, scalable, and accessible at the same time.

Solana and Stellar are designed for financial transactions, providing high-speed processing at a small fraction of the cost of traditional networks.

Future Outlook: The Integration of PayFi, DePIN, and RWA

PayFi, DePIN, and RWA are merging together as finance is evolving in real-time. Traditional systems operate slowly, DeFi has been stuck in its own bubble, and the integration with the real world has always been missing. This gap is narrowing, and everything is changing.

For the first time, capital is not just flowing, but at work. PayFi turns payments into a profit-generating system. Risk-weighted assets release liquidity from real-world assets. DePIN ensures that infrastructure can operate autonomously through automated on-chain payments. The boundaries between finance, infrastructure, and commerce are becoming blurred. As a result, the economy will rely on real-time, programmable liquidity rather than outdated financial rails.

This transformation is not about speeding up transaction speed, but about redefining the way currency, assets, and infrastructure interact. PayFi is not another DeFi trend, but the foundation of a system that integrates finance into everything we do.

Conclusion

PayFi is a structural upgrade to the way funds flow. As real-world assets (RWA) become deeply integrated with blockchain, finance is transitioning from static traditional institutions to dynamic, programmable systems. Payments are no longer just simple transactions, but can generate income, be automated, and embedded in infrastructure.

The boundaries of finance, commerce, and infrastructure are gradually blurring, with PayFi at the heart of this transformation. Whether it's instant settlements, machine-driven payments, or revenue-based expenditure models, a system that is real-time, frictionless, and independent of traditional financial rails is being established.

The trend is very clear: finance is being codified, liquidity is becoming programmable, and financial access is becoming borderless. PayFi is not a fleeting innovation, but the infrastructure of the next generation economic system.