Enhancing Cross Border Payments using Blockchain
Posted By Khushboo Arora | 24-Apr-2019
Cross border payments are essential for global trade. Payment mechanisms have evolved considerably from bartering to using currencies for buying goods and services. That being said, the execution of cross border payments involves complex and expensive processes.
Some of the challenges faced by cross-border payment services include:
Manual Operational System
One of the major challenges for banks is to form a reliable messaging infrastructure. Most cross-border transactions are processed using “SWIFT MT103” messaging format, a highly-reliable mechanism to share a limited amount of information.
For sending additional information MT199 message system is used. Information that is above MT103 and MT199 specifications is sent via email.
Operational inefficiencies in cross border payments are due to manual processing and non-automated messaging on the sending and receiving sides. The time spent on regulating these inefficiencies could be spent on other business improvement activities.
High Processing Cost:
The overall processing cost of conventional cross-border payments is really high. International payment exchanges typically charge anywhere between $100 to $1000 to transfer money. Payees often complain about incomplete payments because processing charges can be significant due to exchange formalities.
Slow Payment Processing:
Cross border payments tend to be time-consuming and complicated leading to dissatisfied customers.
Some reasons for payment delays are :
Incomplete Payment information
AML checks and frauds
Lack of digitization and standardization of payments involving complex authentication processes
Manually intensive cross-border payment will continue to be sluggish. Transactions can take hours to weeks for completion depending on the value and number of intermediaries.
Online payment platforms or digital wallets are becoming ubiquitous because they process transactions faster. However, digital transaction platforms require a huge investment with a particular focus on security. Blockchain payment systems offer better alternatives in the form of cryptocurrencies which are more secure.
Five years ago bitcoin was in the headlines with its promise for processing payments efficiently with significant cost reduction. However, cases of Bitcoin frauds started rising and tarnished cryptocurrency’s reputation
Blockchain Technologies are embryonic but they do hold capabilities for processing cross border payments faster. Oodles Technologies provides fintech application development services to enable efficient and simplified cross-border payments. Fintech platforms enable transactions with little or no costs. Our developers provide applications that facilitate smooth trading of shares and crypto and non-crypto assets. We developt smart contracts using blockchain technologies such as:
Stellar: Our Stellar smart contracts provide reliable and quick cross-border transactions of digital assets
Ethereum: We have a team of blockchain experts that is adept at developing smart contracts that streamline clearing and settlement processes
Waves: We provide easy-to-use and secure Wave blockchain smart contracts for managing, trading, storing and issuing digital assets.
NEM: Our developers create NEM blockchain applications that contain salient features of smart asset blockchain and distributed ledgers
Fintech development advantages with Oodles
Oodles develops efficient fintech solutions with multiple blockchain technologies that simplify financial processes and enhance business value with the following advantages:
Cost Effective Transactions
Global businesses need a new cross-border payment method which is economical, rapid, transparent, convenient and highly secure. Incorporating a regulatory mechanism like KYC, AML can ensure payment transparency.
Some traditional banks are preparing themselves to adopt SWIFT’s GPI initiative to improve overseas money transfer. Technological innovation offers similar money exchange method without interference from central administrators and intermediaries. Blockchain provides a direct exchange of tokens in real-time using a secure and robust payment mechanism. As a result, the acceptance of blockchain technologies by financial institutions is rising steadily.
Are you planning to avail a reliable blockchain application? Get in touch with us for user-friendly, secure, efficient, and highly performant blockchain applications. We develop assets exchange and smart contract platforms for clients across the globe. Our services include multiple markets configuration, financial regulatory compliances, detailed analytics, and easy payment transfers. Apart from blockchain solutions, we provide development services for mobile apps, SaaS applications, Artificial intelligence, and DevOps. Contact us for more details!