What are the problems with today’s payments industry?
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.
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:
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.
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.
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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