The advancement of technology and the massification of new forms of remote jobs and businesses are changing the economic reality. Cross-border payments have become a priority, but the system is outdated and only Blockchain will update it.
It is no secret to anyone that transferring money from one country to another is a cumbersome process. Commissions are arbitrarily set and on many occasions, the time to take effect is long.
Before the Covid-19 pandemic, this applied to people who sent remittances to their countries of origin. But with the massification of digital jobs, the need for a cross-border payment method in real time, cheap and reliable, has become imperative and Blockchain is necessary for this.
Cross-border payments need Blockchain
According to data from the World Bank (WB), the main remittance-receiving countries are India, China, Mexico, the Philippines and Egypt. In these nations, financial companies dedicated to handling remittances charge high commissions and thus obtain fabulous profits.
Functioning as a reliable third party is one of the main businesses of many firms in countries with a large part of their population abroad. In this sense, updating these forms of cross-border payments with Blockchain will help the economy of millions of people.
In Latin America, the Venezuela case is emblematic. With tight exchange controls, sending remittances to that nation is expensive and complex. With some payment platforms such as PayPal, shipments can be made in real time, but with a high cost of commissions.
Through cryptocurrencies and the Blockchain in general, cross-border payments are a great advantage. Concerns like time, security and fees will become a thing of the past.
Currently, businesses and people in general have several ways to make cross-border payments, most of them expensive or slow. Only those that work with Blockchain, overcome these barriers.
Some of these forms of payment are:
- Electronic purses “e-wallets”. They are virtual accounts and among them are those of cryptocurrencies.
- SWIFT transfers.
- International prepaid cards (one of the most expensive ways to send and receive funds).
- ACH international. These are banks and third-party companies that offer direct deposit services.
Ripple and remote payments
It is almost a fact to say that Blockchain will update the ways of making cross-border payments. With the power of digital currencies like Bitcoin, ETH and stablecoins like USDT or BUSD, the evolution of finance is slowly taking shape.
But most of these pale in comparison to the Ripple project, which, considering the ISO 20022 protocol, also offers an attractive alternative. It should be considered that this was launched by the International Standards Organizations (ISO), to have a universal rate of international payments.
In this sense, a recent publication on the Ripple website highlights, the ISO has application limitations due to the fragmentation of the payment system. Therefore, they explain, a transformation of all this infrastructure is necessary to adapt it to new technologies.
With its global payment network, called RippleNet, this project aims to be at the forefront of updating cross-border payments with the help of Blockchain technology.
Data to take into consideration
- Most firms that offer cross-border payments are expensive, insecure, or slow.
- Blockchain will update cross-border payment methods, with the help of alternative projects like Ripple and other more traditional ones like Bitcoin.
- One of the great advantages of the Ripple platform is that it can support up to 1500 transactions per second.
- Remittances, investment businesses and remote work are the main applicants for cross-border payments.
- The rise of DeFi in the future will allow the most efficient forms of international payments to be addressed on a large scale.
The information in this content has been extracted from reliable sources detailed below.:
1- Professional content management by the authors of CriptoTendencia.
2- External sources: Iso.org, Ripple.com and Migrationdataporta.org.