How can blockchain technology make payments more efficient?

What are the problems with today’s payments industry?

1. Accessibility

• Nearly 1.7 billion people are unbanked globally, which is according to the World Bank - close to one quarter of the global population.

• The world’s top 5 unbanked countries have more than 60% of their population without bank accounts.

2. Speed of settlement

• Traditionally, business payments take at least three working days for clearance, assuming there are no delays from the bank’s side.

• In the case of B2B or more traditional e-commerce a lot of international trade is done by a bank wire transfer which is very inefficient as the payment comes after a week.

• Sometimes the seller cannot ship the items unless they receive the payment, so it creates a lot of issues.

3. Fees

• Usually when you pay with a credit card from the moment you swipe your credit card as a customer to the moment that the money arrives in the merchant bank there are at least five or six intermediaries in the chain.

• Fees associated with remittances in less developed countries is astonishing.

• Personal remittances from overseas Filipinos reached a new high of 35 billion U.S. dollars in 2021, equivalent to 8.9% of the GDP of the Southeast Asian country.

• Money transfer company Western Union has made a lot of money by taking a huge cut of Filipino remittances.

Blockchain technology solutions:

1. Accessibility:

• You do not need a bank account to hold cryptocurrencies – all you need is access to the internet to use a digital asset platform.

• A very large percentage of those unbanked have access to the internet so they have access to crypto.

2. Speed:

• Blockchain networks can process payments on digital asset platforms in a matter of a few minutes.

• We also see positive developments in layer two payment rails, making crypto transactions even faster, with shorter settlement times.

3. Fees:

• Network gas fees can cost less than a dollar.

All these factors mean that crypto payments using digital asset platforms are becoming attractive to businesses because they offer a cheaper, faster, and more innovative way to pay, or get paid - particularly for cross border transactions.

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