Today’s global payments infrastructure has more in common with the outdated postal system than this generation’s demand for instant transactions.
We can purchase cleaning supplies from Amazon on Monday and they’re on our doorstep by Wednesday, but it can take weeks to send money to another country. With conflicting regulations among countries and slow, outdated processes, sending cross-border payments is no easy task for consumers, or the financial institutions supporting them.
Recently, e-transactions have increased over 40% and many payment providers are seeing a spike in digital remittances or the process of transferring money from one country to another. Whether it’s sending money to family members in another country or a business looking to grow their operations, the process of sending money globally is a lifeline for so many. However, the process is often associated with high exchange fees and money is at risk of getting lost along the way.
Working in payments over the past seven years, I’ve observed the inefficiencies in the global payments system, and have personally experienced the challenges and expenses associated with sending money home to loved ones. It’s one of the many reasons why I am committed to breaking down the silos in the payments system with blockchain technology.
An important step in creating a more efficient process for sending money is to ensure that services are globally available. To make this possible, fintechs and payments providers need to think globally before acting globally—every organization has an individual set of needs and the technology they use needs to reflect this. Engineers within these organizations are tasked with making sure their services are running smoothly, align with local regulations and allow seamless transfer of money across borders, blockchain makes this a reality. We’re seeing more and more engineers turn to blockchain technology to break down these silos because it has the unique potential to connect fragmented networks across the world. To be a large global network and bring the patchwork together, blockchain gives us the building blocks to increase trust and remove friction.
While we’re still in the early stages of blockchain, it has the unique ability to transform nearly all industries and create entirely new economic models.
To create a more interoperable payments system, engineers working to make this a reality have to think beyond what’s possible today. By using a common and universally accepted way to send money, the application of blockchain technology in payments facilitates faster transactions while fostering instant trust between parties. Blockchain is also a highly versatile technology – enabling everything from near-instant cross-border payments to reducing trade risk and providing deeper visibility into millions of supply chain events every week.
Take the gig economy for example. Blockchain technology offers a new way for freelance workers to get paid quickly and efficiently. Today, amid the global pandemic, access to quick payments is a priority. On top of that, in 2020, roughly 57 million Americans are engaged in some type of gig work. With blockchain technology, these workers could easily get paid in a way that works best for them, whether it’s in U.S. dollars or cryptocurrency, and without having to wait days, or even weeks for a direct deposit. This also makes it so talented people in the developing world have access to well-paid professional jobs and sustainable sources of income.
Leveraging advancements in technology, blockchain, alongside cloud technology, will also play an important role in enhancing today’s fragmented payment system. Most banks and financial services institutions are playing catch-up to organizations who have already adopted cloud. Yet, maintaining on-premises infrastructure is challenging, expensive and can slow down the process of transferring money for their customers. Paired with a strong blockchain foundation, a cloud-based payments system will allow people to continue to send money globally, instantly, reliably and for fractions of a penny.
Sending money should be simple, but fintechs can’t do it alone. It’s important that technology providers are working directly with regulators and central banks to create a payments system that makes sending money simple and secure. By leveraging cutting-edge technology like blockchain, we can solve real problems in payments that impact everyone, everywhere.