Growth of Cryptocurrency Payment Apps Enables Transactions at Merchants That Do Not Directly Accept Crypto.

Inside the Rise of “Pay‑on‑Behalf” Apps: Making Crypto Spendable at Merchants That Don’t Accept It

By [Your Name] – January 31 2026

A new wave of fintech startups is quietly expanding the practical use‑cases for cryptocurrencies. By leveraging “pay‑on‑behalf” models, these platforms let consumers settle everyday purchases with digital assets—even when the point‑of‑sale (POS) infrastructure of the merchant remains unchanged. The concept, which first appeared in experimental demos at hackathons, is now being deployed in real‑world settings across Asia and Eastern Europe.

Below, we break down how the technology works, highlight the leading players, and examine the regulatory and user‑experience challenges that could shape the sector’s future.

How the Pay‑on‑Behalf Model Works

1. Consumer scans the merchant’s standard QR code – Most retailers already display a QR that links to a bank‑linked payment system (e.g., Thailand’s PromptPay, Russia’s SBP).
2. App captures the transaction amount – The shopper opens a crypto‑payment app, enters the amount, and authorises a transfer of digital assets (Bitcoin, USDT, TON, etc.) to an escrow address controlled by the platform.
3. Local partner settles the fiat – A vetted “counterparty” in the same jurisdiction receives the crypto, converts it to the local currency, and pays the merchant through the traditional network.
4. Funds are released to the partner – After the merchant confirms receipt, the escrow releases the crypto to the partner, completing the cycle.

The escrow function essentially acts as a temporary promise‑to‑pay, allowing the merchant to receive fiat instantly while the consumer pays in crypto without needing any integration on the merchant side.

Trailblazers in the Space

PlebQR’s integration with Thailand’s government‑backed PromptPay demonstrates that a crypto‑centric solution can plug directly into an existing nationwide digital‑payment ecosystem. Antarctic Wallet, by contrast, targets a market where direct crypto usage is legally restricted, using a hybrid custodial model to navigate sanctions‑related constraints.

Regulatory Landscape

The pay‑on‑behalf approach sidesteps the need for merchants to adopt new POS hardware, but it introduces a different set of compliance questions:

• Custody vs. non‑custody – Centralised platforms that hold user balances and perform the fiat conversion become the primary anti‑money‑laundering (AML) gatekeeper. Non‑custodial designs shift most of the risk to the counterparty network, potentially reducing the platform’s exposure but raising concerns about traceability.
• Sanctions and jurisdictional risk – Operating in countries with heavy financial restrictions (e.g., Russia) can attract scrutiny from regulators worried about sanctions evasion. The presence of opaque intermediaries complicates the “know‑your‑customer” (KYC) chain.
• Consumer protection – Because the crypto funds are locked in escrow until the fiat leg settles, users may experience delays, frozen balances, or outright failures if a local partner is unable or unwilling to complete the transaction.

TRM Labs analysts Tom Armstrong and Ari Redbord have warned that while the model delivers a tangible “real‑world crypto” use case, the hidden layers of liquidity providers and escrow services could trigger AML red flags, especially in high‑risk jurisdictions.

User‑Experience Trade‑offs

• Speed – Payments typically complete in under two minutes, which is acceptable for low‑value retail but still slower than the sub‑second authorisation of Visa or Mastercard.
• Reliability of local partners – The system’s success depends on the availability and solvency of the counterparties who perform the fiat conversion. Outages or liquidity shortages can stall transactions, eroding consumer confidence.
• Privacy – Platforms like PlebQR emphasise data minimisation, deleting authentication details after each transaction. However, the escrow still requires some data to satisfy AML checks, creating a tension between privacy and regulatory compliance.

Key Takeaways

1. Pay‑on‑behalf apps are moving from proof‑of‑concept to production – Real‑world usage in Thailand and Russia shows that the model can handle modest transaction volumes.
2. Regulatory risk is the main headwind – Centralised custody, cross‑border fiat conversion, and operation in sanction‑heavy regions expose these services to AML and sanctions scrutiny.
3. Speed and reliability remain gaps – While average checkout times are under two minutes, they lag behind traditional card networks and hinge on the health of local liquidity partners.
4. Privacy vs. compliance trade‑off – Some projects aim for minimal data retention, but practical AML/KYC obligations inevitably require some level of user information.
5. Market niche: “crypto‑enabled fiat” for restricted economies – In places where direct crypto payments are prohibited or technically infeasible, pay‑on‑behalf solutions provide a workaround that could become a foothold for broader crypto adoption.

Outlook

If the regulatory environment stabilises and platforms can demonstrate robust AML frameworks, pay‑on‑behalf applications may become a standard bridge between decentralized finance and everyday commerce. Their ability to work with existing QR‑code payment systems means they could scale quickly in regions that have already digitised retail payments but lack crypto infrastructure.

Conversely, heightened enforcement—especially in jurisdictions with sanctions concerns—could force startups to either adopt fully non‑custodial designs or retreat from high‑risk markets. For investors and developers, the next few quarters will likely determine whether pay‑on‑behalf solutions evolve into a mainstream payment option or remain a niche workaround for crypto enthusiasts.

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Sources: Company websites, The Defiant reporting (Jan 2026), TRM Labs compliance commentary.

Source: https://thedefiant.io/news/infrastructure/crypto-payment-adoption-without-point-of-sale