Saving Money And Time With Crypto-Powered Global Payments

What's behind the boom in crypto payments?

When it comes to cryptocurrencies, mainstream media and commentators seem to be fixated on the value of bitcoin, whether it’s soaring - or indeed slumping as is the case at the moment. The attention given to market volatility can distract casual observers from a lot of other positive innovations happening in the space. Cryptocurrency is much more than just an investment vehicle. As a payment method, crypto is positively booming. We've seen through our own crypto payments platform that more people than ever are looking to pay for goods and services with cryptocurrencies, irrespective of their current performance as trading assets.

The utility of cryptocurrencies 

This boom in crypto payments should not come as a surprise. Stablecoins are perfectly suited as a medium for international payments. For a start, blockchain and blockchain-native cryptocurrencies are by nature global with the underlying ledger distributed worldwide. Cryptocurrencies are also built with security and transparency at front-of-mind, and are not easily controlled by nation states or other third parties. 

Crypto is also cost effective. It started life as a means to challenge established financial institutions and monetary networks. Today, even as it evolves from a novel payments technology used by a niche set of global businesses into a mainstream payments network, it remains true to its origins by cutting out unnecessary costly intermediaries.

With fewer hands processing payments, cross-border transactions are also much faster with cryptocurrency – a matter of hours compared to several days using SWIFT.   

The changing of the guard

What we're seeing play out in real-time is the gradual displacement of a system for moving money across borders that was built for a previous age. The SWIFT, Visa, and Mastercard transaction networks date back to the 1970s and were designed for an analogue world where fiat was the only game in town.

We now live in an increasingly digital world, where fiat is only one possible form of payment. In this context it's only natural that we should be seeing an infrastructure upgrade round about now.

It's not just the infrastructure that's in need of a refresh. The industry that supports cross-border payments is highly fragmented and burdened by regulations and constraints that vary widely between jurisdictions. As a result, merchants looking to offer a truly international service have had little choice but to work with the specific payments service provider set up to cater for each nuanced market they wish to enter or operate in.  

This is similar to the difficulties that come when working with SWIFT, where businesses are obliged to work with a large variety of bank accounts denominated in the various currencies they use in their operations. The fragmentation of the payments ecosystem has added complexity to the process, which in turn has led to opacity, long settlement times, and high transaction costs – exactly the challenges crypto payment rails can solve.

Crypto payments come of age

Merchants are late to the game when it comes to cryptocurrency, which started life as a peer-to-peer service largely to help consumers looking to avoid the established financial system. Next, crypto evolved into a trading asset, and investment firms are well ahead of other businesses when it comes to crypto integration. 

Today, however, crypto is making a serious case for widespread adoption by merchants. Consumers are demanding the flexibility to be able to pay with crypto; while the much lower cost of crypto for FX transactions, as well as the speed and simplicity it brings to cross-border payments, is making it an increasingly attractive addition to the corporate treasury operations. 

This move has been given a recent boost by technologies that make it easy for businesses to on- and off-ramp crypto. Being able to switch between fiat and cryptocurrency enables crypto liquidity, and the latest ramps enable businesses to do so simply, while remaining in compliance with Know Your Customer regulations.

So, even if the market for crypto assets continues its volatility over the months ahead, we can be confident that enterprise-grade crypto payment solutions will continue to thrive – first as an alternative to fiat currency and then, who knows, maybe as a replacement.