Today’s global payments infrastructure has more to do with the outdated postal system than this generation’s demand for instant transactions.
We can buy cleaning supplies from Amazon on Monday and they will be on our doorstep by Wednesday, but it can be weeks before we send money to another country. With conflicting regulations between countries and slow, outdated processes, sending cross-border payments is not an easy task for consumers or the financial institutions that support them.
Recently, e-transactions have increased by over 40%, and many payment providers are seeing an increase in digital transfers or money transfers from one country to another. Whether it is sending money to family members in another country or to a company looking to grow their business, the process of sending money around the world is a lifeline for so many. However, the process often comes with high conversion fees, and there is a risk of money being lost along the way.
I’ve worked in payments for the past seven years, observing the inefficiencies in the global payments system. I have personally experienced the challenges and costs involved in sending money home to loved ones. This is one of the many reasons I am committed to breaking the silos in the payment system with blockchain technology.
An important step in creating a more efficient process for sending money is making sure the services are available worldwide. To make this possible, fintechs and payment providers have to think globally before they can act globally. Every company has unique needs and the technology they use must reflect this. Engineers in these organizations need to ensure that their services run smoothly, conform to local regulations, and enable seamless cross-border money transfer. Blockchain makes this possible. More and more engineers are turning to blockchain technology to destroy these silos as they have the unique potential to connect fragmented networks around the world. In order to be a large global network and bring the patchwork together, blockchain gives us the building blocks to build trust and eliminate friction.
While we are still in the early stages of blockchain, it has the unique ability to transform almost all industries and create entirely new economic models.
To create a more interoperable payment system, engineers working to make this a reality must think beyond what is possible today. By using a common and widely accepted method of sending money, applying blockchain technology to payments enables faster transactions and promotes instant trust between the parties. Blockchain is also an extremely versatile technology that enables everything from almost instant cross-border payments to reducing trade risk and having a deeper view of millions of supply chain events per week.
Take the gig economy, for example. Blockchain technology offers freelance workers a new way to get paid quickly and efficiently. In the midst of the global pandemic, access to fast payments is a priority today. Additionally, as of 2020, there are around 57 million Americans doing some type of gig work. With blockchain technology, these employees could easily be paid in a way that works best for them, be it in US dollars or cryptocurrency, and without having to wait days or even weeks for a direct deposit. This also makes it so talented that people in developing countries have access to well-paid professional jobs and sustainable sources of income.
In addition to cloud technology, blockchain will also play an important role in improving today’s fragmented payment system. Most banks and financial services institutions are catching up with organizations that have already adopted the cloud. However, maintaining the local infrastructure is challenging, expensive and can slow down the transfer of funds for your customers. Coupled with a strong blockchain foundation, a cloud-based payment system enables people to continue sending money around the world, instantly, reliably and for fractions of a penny.
Sending money should be easy, but fintechs can’t do it alone. It’s important that technology providers work directly with regulators and central banks to create a payment system that makes sending money easy and secure. By using cutting edge technologies like blockchain, we can solve real payment problems that affect everyone, everywhere.