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Capturing product-to-cryptocurrency market fit in cross-border payments
In a landscape defined by unprecedented digitalisation and global connectivity, cross-border payments remain a paradox.
This is because, despite the size of the total addressable market – which is expected to reach a staggering 290 trillion by 2030 – cross-border payments they are full of inefficiencies, high fees, and delayed transactions. A situation almost entirely due to the continuing limitations of traditional methods and legacy infrastructures.
However, successfully making cross-border payments is increasingly critical for businesses looking to expand internationally and capture growth in new markets. That’s why businesses are starting to turn to alternative vehicles for moving money across borders, including blockchain-based solutions that offer streamlined cross-border flows by freeing up capital previously trapped in correspondent accounts in multiple countries.
After all, as long as businesses are being charged foreign exchange (FX) fees, transaction and correspondent banking fees, compliance fees and shipping costs, tariffs and taxes, all while their money moves at a snail’s pace, there is a It is an interesting opportunity to reduce payment costs while providing a better user experience.
And with the news that Highwaythe largest custodian bank in the world reconstruction its digital assets team just six months later let the staff gooptimism around cryptocurrencies adaptation of the product to the market Cross-border is becoming increasingly difficult for companies seeking an operational advantage to amortise.
to know more: Seizing the $250 trillion cross-border payments opportunity
Remove friction from cross-border B2B payments
Cross-border payments inherently have more points of failure than their domestic counterparts, which is especially true for B2B payments. Compliance is a ever-present questionwith local anti-money laundering (AML) policies, Know Your Customer (KYC) policies and sanctions controls that need to be addressed for each individual region – and there are over 19,000 of them tax jurisdictions all over the world.
According to a recent PYMNTS Intelligence survey, the failure rate of cross-border payments is approaching 11%, or $3.8 billion in lost sales in 2023 alone.
Lag times and the threat of fraud also create bottlenecks, while exchange rates and a long list of fees add to their hurdles. According to separate PYMNTS intelligence research, nearly half of Citibank Corporate customers rate high costs as the biggest pain point when making cross-border payments, and 59% say the same low speed.
“This fundamental problem is what it takes to move money across borders… you are charged high fees to move money across borders, and you also have the inability to track those payments and know for sure that they have arrived,” Brooks Entwistlesenior vice president of global customer success and managing director of the enterprise crypto solutions company Ripple, he told PYMNTS. “As these companies grow, there is a need to really move value faster and to more places.”
In this context, blockchain-based cross-border solutions, in particular stablecoins, they are increasingly being adopted by businesses looking for a better way to transact and expand internationally.
THE Solana elaborate network $1.4 trillion in the stablecoin cross-border payments just last March – a will to the scalability of the technology.
See also: Interoperability and transparency are key challenges as cross-border payments modernize
Assessing the future of cross-border payments
AS Jim Colassanosenior vice president of RTP product development at The Clearing House (TCH), told PYMNTS, “instant cross-border payments are the solution Holy Grail of payments”.
And new PYMNTS Intelligence finds that, when it comes to cross-border payments, blockchain solutions could do it offer benefits compared to traditional systems. That’s because blockchain’s high productivity, low fees, and 24-hour availability could remove much of the friction of cross-border transactions, making them as easy as sending a Venmo payment.
Despite the promise, the path to widespread adoption of cryptocurrencies for cross-border payments is not without obstacles. Cryptocurrency regulatory frameworks vary significantly from country to country, creating uncertainty and potential legal challenges. Central banks and financial regulators are also concerned about the possibility that cryptocurrencies facilitate money laundering and other illicit activities.
But PYMNTS Intelligence finds there are some best practices for businesses looking to leverage blockchain to integrate their cross-border payment mechanisms.
This includes partnering with a FinTech that can streamline cross-border payment processing and facilitate the conversion of digital currency into fiat currency, ensuring a streamlined cross-border payment experience; incorporate stablecoins into payment systems; implement permissioned, business-friendly DeFi solutions that automate and secure B2B transactions through smart contracts; and, of course, to educate both corporate customers and banks about the benefits of blockchain-based B2B payments.
After all, the frictions that exist in the cross-border landscape may be unavoidable, but they do not have to be inevitable.
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