From swipes to sats: Open Money payment networks
Where traditional payment providers built walls and tolls around the flow of money, Open Money builds bridges—fast, open, and borderless.
One of the popular use cases for Open Money systems is digital payments. We all make payments using cards every day. Cards have replaced cash for most transactions. But the thing is, almost no one thinks about what happens when you actually swipe your card.
Let’s say you are using a Visa card. Every time you make a payment it triggers an elaborate process of moving money. While a system like Visa is pretty amazing because it abstracts a lot of the complexity of moving assets from one account to another account without anyone actually having to handle cash, it also triggers a chain of processing expenses (both interchange fees and processing fees), which can end up costing between 1.5% to 3.5% of a transaction.
The other thing about a system like Visa is that it’s a network based on permission. I can’t just launch my own Visa card tomorrow, for instance. Instead, I would have to be an official bank or a licensed entity. That’s a benefit in terms of network security and helps with operational efficiency. But it also adds to the expense and complexity.
Here's a quick breakdown comparing Visa with Lightning Network:
| Feature | Visa | Lightning Network |
|---|---|---|
| Transaction speed | 1–3 seconds (authorization); 1–3 days (settlement) | Instant (milliseconds) |
| Transaction fees | 1.5%–3.5% plus processor fees | Typically < 0.01% |
| Access model | Permissioned (licensed banks & processors) | Permissionless (anyone with wallet + internet) |
| Programmability | Limited (closed APIs, no smart contracts) | High (smart contracts, programmable payments) |
| Composability | Low (walled garden) | High (open protocols, modular) |
| Global accessibility | Restricted by geography & regulation | Borderless, censorship-resistant |
| Settlement finality | Delayed (chargebacks possible) | Instant and irreversible |
| Infrastructure ownership | Centralized (Visa Inc. and partners) | Decentralized (nodes run by users) |
| Innovation speed | Slow (institutional drag) | Fast (open-source iteration) |
One of the earliest use cases of crypto was to solve some of the friction (and expense) of traditional payment networks by offering a peer-to-peer internet-native version of payments.
In the early days of crypto, making micro payments or even everyday payments, like buying a cup of coffee with bitcoin wasn’t really feasible because of network speeds (you would need to wait for block confirmations) and the transaction fees could be more than the actual purchase, depending on network congestion.
But then technologies like the Lightning Network, which uses Bitcoin as its final settlement layer but handles the actual transaction in a layer two, made it possible to do small, fast, and cheap payments onchain.
Other protocols now have similar functionality, like Solana Pay for example. The goal of these specialized payment networks is to drive down transaction costs and time. But more than that, they also incorporate other elements of Open Money, such as the ability to make payments programmable (they can be triggered by conditions outlined in a smart contract, for example) or easily spit among multiple parties.
These new kind of Open Money payment networks are also composable. That means they can be used as ingredients to build other kinds of apps or services, or combined to create something completely new.
And fundamentally these new payment apps are open and permissionless, meaning anyone can use them to send payments or to start receiving payments.
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Daniel McGlynn
Daniel McGlynn
Daniel McGlynn