Blockchain, the most disruptive technology known for changing the way we pursue transactions today. Globally, individuals and businesses are adopting blockchain technology to conduct financial transactions.
The traditional cross-border payment system hasn’t changed in decades. With the evolution of blockchain technology, the fintech space is adopting it to address international payment’ challenges. Today across the globe, fintech companies are leveraging blockchain to improve the efficiency of global transactions. Genuinely, blockchain has been the most exciting space that the world believes will become an integral part of the finance world.
Before understanding the blockchain-powered finance solutions, let’s take a look at the cross-border payment system challenges.
Challenges Involved in Cross-Border Payments
Conducting international transactions through banking institutions and dealing with middlemen has always been a significant concern. Kicking off the payment, to successfully transfer funds to the receipt bank account, consumes a lot of time and money. It also stresses the payor due to the lack of transparency and accountability.
International payments are charged a higher transaction fee with several go-betweens involved. The payor bank, the central bank, correspondent banks, and then finally the payee bank. In this process, each bank charges a specific fee based upon the service. Also, the remittances via all these banks may take up to a week to complete the transaction.
Sometimes, currency exchange, currency conversion, and custodial fees turn out to be the biggest challenge. Also, to store these Fiat and digital currencies, a secured digital wallet is quite essential. Do you see it? It is all interlinked.
Blockchain: The Solution
To all these finance and banking challenges, blockchain became the one-point solution. This disruptive technology streamlined the entire fintech space with robust solutions. Blockchain technology is making it easier to conduct cross-border transactions by removing the middlemen and lowering the transaction fee. As a result, instead of days, the blockchain-based transactions move in a fraction of seconds.
Benefits of Using Blockchain Technology
With the usage of distributed ledger, blockchain has put an end to the risk of transparency. It verifies and holds each transaction in its decentralized ledger. Also provides open access to the users on its network. So, any user from anywhere in the world will be able to see the entire history of recorded transactions.
These records are stored in a decentralized network and secured by cryptography. The network records any changes made to the data in the history of transactions. Therefore, no hackers would be able to manipulate or hack the data.
- Cost-efficient by lessening the transaction fee
- Secure and transparent with real-time accountability.
Cross-border payments powered by blockchain are offering material benefits to consumers. The technology has made the payments easy with instant settlements,
Soon its potential will strengthen international payments and foster accountability and security. In conclusion, the future is all blockchain!