Do you know what’s crazy? The current money system the entire world relies on isn’t designed for or adapted to the global economy. It’s true, and it causes countless problems every single day.
Existing financial infrastructure was designed in the early 20th century, mainly for large institutions that would need to send bulk payments across the globe. It was built for an analogue world. It never designed to be fast, cheap or scalable. Most of what is used to send money today is haphazardly adapted versions of this technology, which comes with numerous issues.
The most pressing problem with the existing payment infrastructure is sending money across borders. It’s extremely expensive for regular people and for businesses and it’s actually putting small and medium sized businesses (SMEs) at a severe disadvantage. Especially in a time when international trade and online sales are one of the few ways to grow.
Cross-border payments by SMEs account for a significant portion of the global B2B payments market, totalling between $10-15 trillion USD annually. This is largely driven by globalization and the boom of international ecommerce. But despite this growth, cross-border transaction costs are making it hard to compete with larger corporations on a global scale. This is because of a few damning reasons:
- Large fees, which can amount to 10+%
- Slow settlement times, often taking more than a week
- Transaction risk
- Foreign exchange restrictions, which can limit the amount of money a business is able to transact in and out of a country for a period of time
To remove this disadvantage for SMEs, a more affordable cross-border payment solution is required. Many are looking to blockchain to solve the problem.
Is blockchain the answer?
If we’re trying to build a solution that can send payments, regardless of size, anywhere in the world quickly and cheaply, cryptocurrency does certainly seem like a no brainer. Not only that, but if used correctly blockchain-based payments can offer enhanced security for transactions too.
The most obvious question is whether blockchain can handle the transaction throughput. If we’re hoping to create a cross-border payment solution that’s going to be used worldwide, the network will need to be capable of handling hundreds of thousands, if not millions of transactions per second.
Scalability is a valid concern, but it’s not a problem anymore. Sure, when cryptocurrency was new it became a friction point, but by now blockchains have sufficiently tackled the scalability problem and many more are still innovating, aiming to one up their competition and take scalability to a new level.
Truthfully, the contrast between blockchain payments and traditional cross-border transactions is staggering. With traditional methods numerous middlemen are required, transaction times are slow and fees are high. With blockchain, transactions don’t need to be lumped together because they are very fast, they settle instantly and they cost next to nothing.
Governments are interested
Cryptocurrency enthusiasts think that they’re onto something here, and when large governments are taking interest it’s hard to ignore. China has revealed plans to create an East Asia cryptocurrency scheme which would involve the creation of a digital currency that is based on the value of Chinese yuan, Japanese yen, South Korean won and Hong Kong dollar. This digital currency would be backed by all four currencies, but not equally. The proportion would be calculated based on the economic scale of the associated economy.
The purpose of this is straightforward – it would provide businesses in Asia a suitable means to transact across borders with digital wallets, vastly improving cross-border trade and also reducing the risk of exchange volatility. Something like this would be a huge move for the progression of the cryptocurrency space and it also lends a lot of credence to what the projects here are trying to achieve, even if it doesn’t directly adopt their technology.
Utrust can make blockchain payments a reality
If online businesses want to go global, at the moment they are either at the mercy of the poor existing traditional financial services or they can choose to accept cryptocurrency. The problem with that is that there are many different cryptocurrencies. If a merchant doesn’t accept many of them they could exclude customers, but by accepting too many they are creating a lot of work to settle and potential market exposure that could lose them revenue.
That’s where Utrust comes in. Utrust is a borderless payment technology that can be easily integrated into any ecommerce business. In doing so, ecommerce businesses are able to start accepting cryptocurrencies as payment methods and receive all of the benefits of blockchain payments without any of the negatives.
The most powerful service that Utrust offers here is for businesses to accept payments or move money across borders without incurring large fees that they would with traditional services. By using Utrust, businesses can operate across borders without their revenue being decimated by over-sized fees and transaction settlement time will be measured in seconds, rather than days.
Merchants can get instant blockchain payments yet avoid market exposure by instantly settling their revenue to fiat when using Utrust. There is also built in business and purchase protection, which gives each side of the transaction peace of mind because they know that if there is an issue, Utrust can help resolve it.
Finally, Utrust maintains a low fee of 1%. A huge benefit of cryptocurrency payments is the cheap transaction fees, so Utrust offers a transaction fee that’s much lower than traditional payment competitors. The fee enables Utrust to offer their amazing service in more than 180 countries yet offers merchants the ability to keep more of their profits.
Traditional payment methods are archaic making global business a struggle, especially for SMEs. Blockchain payments could be the answer, as shown by Asian governments. Utrust provides a blockchain payment solution that enables ecommerce merchants to easily accept cryptocurrencies as payment, which could be the best way for SMEs to transition to blockchain payments.
The Daily Chain
*This article has been sponsored. The Daily Chain encourages you to carry out your own research before you make any form of investment and educate yourself about how to stay safe in the crypto space.