Global payments are notoriously opaque. The “black box” transacting that shuffles money across borders is arduous, slow, and expensive, with wire fees and hidden fees totaling more than $50 billion per year. And both buyer and supplier have no idea where their money is or how much will arrive after the fees have been subtracted. It’s the result of a dated system that’s slowing down the $24 trillion in cross-border payments, an amount that’s expected to balloon to $54.5 billion by 2022.
But new technology and online payment methods allow businesses to see where the money is at every step of the way as it exchanges hands. It’s now possible to track payments as easily as any package. Anyone can follow an online order from the moment it’s packed and shipped to its travel from warehouse to warehouse until it’s delivered. Shouldn’t something as crucial as payments be just as trackable?
Wire transfers are problematic from the get go. The process of going to the bank, standing in line, and filling out wire forms – each requiring the bank account details of the recipient, swift codes, routing numbers, and a ton of other personal information on both ends – not only threatens the security of both parties, but is a costly and slow way of paying. After that tedious process, you have to ensure that the wire payment is done by a certain hour otherwise the payment will have to wait until the following day, and may take up to five days to get there, depending on your destination. If you’re receiving a wire, your account is charged wire fees automatically. That gives you even less control over your financials. Wires are essentially the dinosaurs of today’s payments ecosystem.
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In our view, the solution is the blockchain, a rail for moving payments across borders and currencies that makes global payments simpler, more secure, and completely trackable. The blockchain eliminates the need for wires, subsequent wire fees, trips to the bank, and it speeds up the payment process by eliminating the intermediary bank.
The blockchain offers businesses total clarity on what is happening with a payment and when, as opposed to the closed system of multiple banks that has traditionally handled global transactions. Now, whether you’re sending a payment or an invoice, you can see when the invoice was sent, the amount, when the funds are received and sent, and when the transaction is completed.
As the need for global payments drastically scales, the industry desperately needs a more transparent solution. It’s not just about ensuring invoices are paid, but cultivating the business relationships behind them. A better view of all the pieces of the transaction, from invoice to final receipt, is now possible using the blockchain. Tapping the power of this new technology will allow companies unprecedented visibility into their global transactions, and accelerate the speed at which the growing cross-border payments space does business.