Are satellites payments the future for improved financial inclusion?

As payments become increasingly cashless we inevitably become more reliant on technology. This highlights the challenge that we need the ability to make cash-like payments offline without access to the internet. Many commentators see this as the holy grail of digital payments. 

The first satellite payment is generally believed to have been made in 1999 by the European Space Agency (ESA) when it launched 'SPOT'. SPOT gave users the ability to make payments using their mobile phones by sending text messages to a satellite. The system was used in areas with limited or no internet connectivity. 

Fast forward 25 years and today there is a growing commercial interest in satellite payments with several companies developing this technology, and some governments actively exploring the possibility of using it to provide financial services to people in remote areas or as part of their disaster recovery plans.

The introduction of satellite payments are being developed by several new entrants including: 

Blockstream: Blockstream has raised over $100m. The blockchain technology company is developing a satellite-based payments network called Blockstream Satellite. The network is designed to provide a secure and reliable way to send and receive payments in areas with limited or no internet connectivity.

Swarm Technologies: Swarm Technologies has raised $50m for its development of a constellation of small satellites that can be used to provide a variety of services, including satellite payments. The company's satellites are designed to be low-cost and easy to deploy, making them a good option for providing financial services in remote areas.

Solana: Solana has raised over $300m. This blockchain platform is developing a satellite-based payments solution called Solana Pay. The solution is designed to be fast, secure, and affordable, making it a good option for businesses and individuals who need to send and receive payments globally.

Satellite payments work by using satellites to send and receive payments. The sender and recipient of the payment each have a satellite payments device, such as a mobile phone or a tablet. The devices are connected to a satellite network, which allows them to communicate with each other.

To send a payment, the sender enters the recipient's information and the amount of money they want to send. The device then encrypts the payment information and sends it to the satellite network. The satellite network then forwards the payment information to the recipient's device.

The recipient's device decrypts the payment information and credits the amount of money to their account. The entire process takes place in seconds, and the payment can be made regardless of the location of the sender or recipient.

This technology has the potential to revolutionise the way we pay for goods and services, especially in remote areas or where there is limited or no internet connectivity. There are several benefits to using satellite payments. 

First, they are global. This means that payments can be sent and received anywhere in the world, regardless of the recipient's location.

Second, satellite payments are secure. The transactions are encrypted and cannot be intercepted or tampered with.

Third, satellite payments are fast. Payments can be processed instantly, regardless of the distance between the sender and recipient.

Fourth, satellite payments are reliable. They are not affected by power outages or network disruptions.

Fifth, satellite payments are affordable. The cost of sending and receiving payments is relatively low.

Despite these benefits, there are also some challenges that need to be addressed before satellite payments can become mainstream. One challenge is the cost of setting up and maintaining the satellite infrastructure. Another challenge is the need for regulations to govern the use of this technology.

It is still too early to say whether satellite payments will become the future of payments. However, this technology has the potential to revolutionise the way we pay for goods and services, and it is a promising area of innovation.

Some of the governments that are also exploring the use of satellite payments:

The United Nations: The United Nations is exploring the use of satellite payments to provide financial services to people in developing countries. The UN is working with several companies to develop a satellite-based payments system that can be used to provide  access to banking, remittances, and other financial services.

The European Union: The European Union is also exploring the use of satellite payments. The EU is working with several companies to develop a satellite-based payments system that can be used to provide access to financial services in rural areas.

The United States government: The US government is also interested in the potential of satellite payments. The US Department of Defense is funding research into the use of satellite payments to provide financial services to military personnel and their families.

There are several real-world use cases for satellite payments. 

One example is the use of satellite payments to provide financial services to people in developing countries. In many developing countries, there is limited or no access to banks and other financial institutions. Satellite payments can help to bridge this gap by providing a way for people to send and receive money, even in remote areas.

Another example is in the field of disaster relief. In the event of a natural disaster, such as a hurricane or earthquake, satellite payments can be used to provide financial assistance to people who have been affected. This can be done by sending money directly to people's mobile phones, even if they do not have access to traditional banking services.

Satellite payments are also being used in the field of supply chain management. By tracking the movement of goods and materials using satellite payments, businesses can improve efficiency and reduce costs.

The volume of payments processed by satellite payments networks is still relatively small, but it is growing rapidly. According to a report by MarketsandMarkets, the global satellite payments market is expected to reach $2.8 billion by 2027, from $500 million in 2022. The growth of the market is being driven by the increasing demand for financial services in remote areas and the growing popularity of mobile payments.

It is still too early to say how long it will take for satellite payments to become mainstream. However, there are a few factors that could influence the timeline for adoption.

The development of new technologies: The development of new technologies, such as blockchain and 5G, could make satellite payments more secure, reliable, and affordable. This could lead to a faster adoption of satellite payments.

The regulatory environment: The regulatory environment could also play a role in the adoption of satellite payments. Governments will need to develop regulations that allow for the safe and secure use of this technology. This could slow down the adoption of satellite payments.

The demand for satellite payments:  The demand for satellite payments will also be a factor. The demand for satellite payments is likely to be driven by the increasing need for financial services in remote areas and the growing popularity of mobile payments. If there is a high demand for satellite payments, it could lead to a faster adoption of this technology.

Overall, it is still too early to say how long it will take for satellite payments to become mainstream. However, this technology is a promising development that has the potential to revolutionise the way we pay for goods and services. As a result it's still too early to say who will win the race for globalisation but clearly the technology has the potential to revolutionise the way we pay for goods and services. As the technology continues to develop and the cost of setting up and maintaining the infrastructure decreases, satellite payments could become a more mainstream payment method.