The blockchain industry is considered the future of monetary systems with its quick, innovative, and inexpensive features that eliminate time-consuming central intermediaries.
As the international payment systems definition goes - it involves any payment made by one country to another and the market in which national currencies are bought and sold by those countries.
When blockchain integration becomes common in the financial sector, you can instantly transfer finances other than the national currencies to your business partners from different parts of the world.
As global trade has been expanding in recent years, international payments are also gradually increasing such that the remittance industry in 2022 alone is valued at a $1 trillion market size.
When international payments blockchain is facilitated, the total remittance paid will be down to 30%, with the least $700 million paid as transfer fees being completely eliminated.
Though this will aid large corporations in reducing a major chunk of their profit, it will also aid in lowering small business and B2B international payments while letting them widen their business horizons due to lower cost barriers.
Thus, the integration of blockchain payments and blockchain international money transfers would aid the global economy is growing to an advanced level.
Domestic money transfers constitute the most significant number of transactions per day. But MasterCard-based or visa international payments and receivables are always welcomed by banks.
Governments also welcome these international money transfers as it enables the inflow of international payments, which increases their economic activity. The transfer fees are the main concern of these payment channels, which are solved by Blockchain payments.
Current international payment channels like Visa MasterCard and International payment gateways like Stripe and Paypal take between 1 to 14 business days to process the transactions, while the transfer fees lie at 1% to 5% or more according to the chosen payment channels. This inconvenience has caused the public to turn their eye toward Blockchain payments.
Around 39 Blockchain-based enterprises have been working on making blockchain international trade easier in the course of the past decade.
Companies like Ripple, Wyre, Bitpay, Bitpesa, and Alipay are a few that accommodate international payments through blockchain. They totally eliminate visa international payments and level up the global payments via cryptocurrency or in fiats but facilitated through blockchain.
Here, the bank intermediaries are replaced by distributed ledgers, where the sender and receiver can easily connect their digital wallets and send money directly, making it instant, easy, and inexpensive.
As many nations were aiming to go cashless in the past decade, it increased international trading as more B2B businesses widened their markets.
Though the central financial system was expensive, the business owners had no choice. Similarly, several industries were facing difficulties with the financial system. As blockchain was aiming to solve their challenges, the public is trying to use blockchain payments to their advantage.
A few of the benefits of blockchain-based international payments are as follows.
When international payments are integrated into the blockchain, the current payment systems will be replaced by decentralized ledgers and smart contracts, which are connected by wallets.
Since these ledgers are built on Blockchain technology, the hash data remains immutable and tamper-proof. It also enables verifications to be done quickly as the database is distributed, and all the nodes will take part in the verification process.
In case the nodes attempt to tamper with any data or transactions, they are slashed immediately.
The market participants, like senders, receivers, and business partners, are directly connected to the distributed ledgers. So, the transactions instantly happen with their wallets, eliminating other financial intermediaries like banks, foreign exchanges, etc.
Furthermore, as the ledgers perform the transaction in a sequential manner, it enables the transactions to be done in real-time. This benefits both individuals and business owners, as the business participants do not need to wait days for the orders to be confirmed.
Most developing countries that incur a lot of remittances can be hugely benefitted from blockchain international money transfer.
According to Blockdata, with blockchain, the transaction costs are 127X cheaper. Their automated verification processes make the transaction processing time 388x faster, which shall benefit hugely in lower-income countries like Colombia, Romania, El Salvador, Lebanon, etc.
Several financial institutions like JP Morgan and Bank of America have seen the potential of blockchain-based international payments. So, these enterprises are currently experimenting with blockchain initiatives to move towards a decentralized future.
Though currently, the international payments ecosystem is dominated by central forces, soon, the industry will be taken over by blockchain-based or blockchain-partnered financial enterprises.
It can be seen in the forthcoming years when major countries that receive a large number of international payments, like India, China, Philippines, Mexico, and France, actively adopt Blockchain payments.
El Salvador is one of the developing countries located in the Central American region. After dollarization, many El Salvadorians moved to the US to make their living while many started to send dollars back to their home country. This has increased over the years, and around 20% of the nation’s GDP relies on remittances from foreign countries.
Ever since Bitcoin became a legal tender in their country, around $96.3 million was received in Bitcoin. For a country that pays millions as remittance fees, this was considered a huge win.
El Salvador’s president Nayib Bukele who proposed the Bitcoin Law stated that “Our people pay $400 million a year in fees for remittances, that saving alone will be a huge benefit for our people — or at least for those who want it.”
Considering the widening market of blockchain technology, banks and governments are being pushed to adopt global payments via cryptocurrency.
Since most people are not equipped and are not aware of the technology, as governments take steps to implement the same, it shall bring in a seamless user adoption environment for people.
Consequently, we can expect that the current traditional way of international payments will take a drastic turn in the near future.
