Axelar Network Report Highlights 50% Growth in Blockchain Payment Solutions

On May 22, Axelar Network, in collaboration with the Stellar network and Stablecoin Standard, released a comprehensive report titled "The Path to Seamless Blockchain-Based Retail Payment: The Role of Interoperability." This report delves into the critical challenges and opportunities in integrating blockchain technology with traditional payment systems, particularly in the context of stablecoins gaining broader adoption under clearer regulatory guidelines. The analysis highlights the growing interest of financial institutions in developing digital payment solutions, driven by the increasing regulatory clarity in the sector.

The report underscores the importance of decentralized interoperability for ensuring secure and efficient payment flows. It provides valuable insights for industry stakeholders who are evaluating new payment solutions, emphasizing the need for a coordinated infrastructure that mirrors the efficiency and reliability of traditional payment networks. The report points out that traditional retail payment ecosystems rely on a layered structure, including payment instruments, networks, and processors, to handle transactions seamlessly. This structure ensures that users have a straightforward and reliable experience in conventional commerce, supported by global standards like ISO 20022 for consistent messaging across international payment networks.

Current payment networks achieve high interoperability through global messaging protocols and shared standards, allowing for seamless transactions across different banking systems. For instance, a U.S. Visa card can be used at a European Mastercard terminal without any issues. Behind the scenes, processors manage currency conversion and regulatory compliance, ensuring a smooth user experience. Blockchain-based retail payment solutions must replicate this coordinated infrastructure to compete effectively. Standardized messaging and API connections are essential for cross-platform transaction success, and replicating these backend processes is critical for any blockchain retail project to succeed.

Blockchain technology offers several advantages over legacy systems, including transparency, lower costs, and faster settlements. However, the fragmentation across distinct blockchain platforms limits direct interaction and creates isolated networks. The Stellar network addresses some of these issues through asset anchors and a built-in exchange, enabling smooth currency conversion across borders. Its open APIs allow seamless connections to banking systems and payment networks, helping merchants receive different currencies while customers pay in their preferred currency. Financial standards compliance supports effective integration with traditional banking rails.

Despite these advances, blockchain-based solutions still suffer from fragmentation, making it complex for users to convert tokens between separate blockchains. Most chains do not integrate natively with traditional payment networks, limiting user options and reducing transaction speed while increasing costs for merchants and consumers. These hurdles hinder the broader adoption of blockchain-based retail payment services. A unified approach to network integration is necessary for real commerce, requiring collaboration among developers and stakeholders on shared standards and protocols.

The report also highlights the role of cross-chain protocols in blockchain retail transactions. A common solution has been custodial bridges controlled by central parties moving assets cross-chain. However, major hacks like Ronin Bridge and the Bybit incident reveal serious vulnerabilities in these centralized models. Losses reaching hundreds of millions resulted from single points of failure, reducing user trust in digital payment systems. Decentralized alternatives could mitigate these risks by removing centralized custody from transaction flows, enhancing security and transparency for widespread adoption.

Building a robust blockchain payment ecosystem demands integrated cross-chain protocols. Axelar’s decentralized model uses independent nodes to manage communication without asset custody, remaining open source with transparent governance that records activity on a public ledger. This approach aligns with the principles needed by modern payment networks for reliability and trust. Ultimately, seamless integration between blockchain platforms and banks underpins commercial use cases. Collaboration across these technologies will determine blockchain payments’ viability in everyday shopping. Future progress depends on shared standards linking blockchains, regulators, and legacy banks.