Blockchain is gaining momentum at a tremendous pace. The foundational technology is finding an increase through global cross-border payment adoption. Contributing factors include cheaper and faster payment processing, traceability, better access in areas with poor banking infrastructure, and more. A recent Juniper Research report indicates blockchain implementation will lead to savings worth 10 USD billion in the banking sector.
Crypto Remittance: The Modern Solution to Legacy Constraints
All cryptocurrencies operate on underlying blockchain technology- be it Bitcoin, Ethereum, or other listed currencies. The decentralized ledger-sharing traits of blockchain are invaluable for real-time traceability and transparency during remittance. And that’s not all, crypto-based remittance services address additional challenges faced by traditional international fund transfer methods.
To start things off, there are no third parties involved between the sender and the recipient. This means an absence of intermediaries preventing unnecessary extension of processing time. This also reduces transaction charges greatly. A notable percentage of expatriates consider sending their hard-earned money to families for this very reason. Conventional payment transfer options usually charge between 5% to 25% as processing fees. Meanwhile, crypto payment processors charge a fraction, and are also suitable for corporate payments.
Crypto’s Success in Cross Border Payments
The inherent benefits of blockchain adoption have not gone unnoticed in the business and finance world. Major payment players have already partnered up with crypto service providers, or incorporated integrations in their existing system with help of blockchain developers.
US-based blockchain development specialist HashCash Consultants offers both of these with its flagship solutions HC Remit and HC Corporate Payment. The firm specializes in blockchain implementation in financial products, and has a verified track record partnering with over 18 MNC banks and forex exchanges across multiple continents.
While scalability has been a past concern, multiple blockchain solutions have already set milestones similar to legacy services. Popular cryptocurrency Ripple received an ISO 20022 Standards Body accreditation. Achievements of different cryptocurrencies make a positive overall impact on crypto remittance as a whole.
The Juniper Report on Blockchain and Cross Border Payments
The aforementioned Juniper Research Report, titled Blockchain in Financial Services: Key Opportunities, Vendor Strategies & Market Forecasts 2021-2030, predicts the US and China will be the biggest benefactors of extensive blockchain adoption. This will translate to massive savings with the help of blockchain, remittance volumes, and improvements in favorable regulatory environments. Other nations will also benefit from further expansion. The report estimates blockchain will be aiding in 2 billion cross-border payment transactions by 2030.
Buy-in by stakeholders will be instrumental for the next stage of blockchain evolution, according to one of the research authors. The rate at which established businesses adapt to the blockchain is key to determining the efficiency of blockchain-incorporated cross-border payment systems. A clear line of communication is thus essential to reel in investors as well as enterprises.
The author, Susannah Hampton, says: “Current international remittance processes are severely constrained by legacy systems. Proof of cost savings through blockchain use will be critical for the technology to proliferate, as will fostering a culture of acceptance for the technology from the top down.”
The Global Crypto Remit Scenario
Crypto-based cross-border payments are invaluable in regions with poor banking and finance infrastructure like Africa. In the year 2020 alone, $562 million worth of digital assets were remitted from international sources into Africa, contributing heavily to Africa’s burgeoning crypto economy. Similar payment systems became a lifeline after the Western Union ceased its money transfer operations in Afghanistan.
National leaders across the Latin Americas are staunch supporters of bitcoin and blockchain. El Salvador jumped further and became the world’s first nation to accept Bitcoin as legal tender. Bitcoin-based payments increased over 2 times reaching USD 3 billion in the span of a year in 2020. Blockchain remittance solutions are also popular in the Middle East and South Asia. Workers save more by transferring their hard-earned remunerations through crypto payment processing systems. Cross-border payments jumped more than 10 times within 2020 in the regions of Indonesia, Malaysia, and the Philippines.
The rapid evolution and adoption of blockchain and crypto are bringing forth a revolution in the world of financial services. Cross-border payment settlements can be processed faster and more efficiently with the help of cryptocurrencies, at much lower costs. Banks, companies, and financial institutions have begun adapting to capitalize on these advantages. Crypto-based payment processors are also popular among expatriates for transferring funds across the border skipping past intermediaries in between.