How Blockchain-based payment system is transforming the Industry

It has become easy for enterprises to automate their daily business processes, by leveraging blockchain technology to improve security and transparency of the transactions. The blockchain-based payment system has transformed many industries, especially the finance industry, with the implementation of ingenious keys for easy payment procedures.

We all have experienced accepting cash payments and seen the transformation of building cashless economies. By adopting multiple digital payment methods, people started to accept various types of money exchange systems and decentralized technology after realizing the benefits of blockchain technology.

To understand the Blockchain Global Payments Network, we have to dive into details of blockchain, its benefits and details of the payment systems.

What is Blockchain?

Blockchain is a chain of blocks that contain specific information, but in a secure and unaffected way. It’s basically a database system designed to record transactions simply by making it impossible to change, hack and cheat the system. Blockchain is a type of DLT (Distributed Ledger Technology) that records transactions with an immutable cryptography signature called a hash.

Whenever a new transaction occurs, it will automatically be added to the blockchain. Every transaction will be validated by the network nodes, and these nodes will come to an accord via a consensus mechanism designed to validate a transaction like Proof of Stake, Proof of Work, etc.

Advantages of blockchain-based payments:

There are so many benefits of using Blockchain Technology, as it facilitates secured, fast and cheap international payment services by using encrypted distributed ledgers meant to provide real-time verification of all the transactions without any need of mediators like banks and clearinghouses. Initially, Blockchain Technology was used to support the digital currency i-e Bitcoin, but now it has been explored for various applications other than bitcoin. Here are some other Benefits of Blockchain in payments;

Eliminates intermediaries

Current payment system requires mediators and intermediaries of different types. While making payment you might have to pass through some intermediaries and authorizations, like payment issuer, exchange mode, gateway, etc. these intermediaries might have some drawbacks, that include; service charges, increased transaction time, etc. However, thanks to blockchain payment systems, you can:

• Settle transactions easily
• Maintain the validity of transactions without any presence of middle-men
• Facilitate peer-to-peer payments
• Maintain the security of transaction data
• Create and use cryptocurrency wallet rapidly

Transparency and security

The most significant benefit of using blockchain technology is its high-level transparency. All the transactions taking place via blockchain network are:

• Safely stored in the blockchain
• Immutable transactions
• Visible to everybody

That’s why you don’t have to worry about saving the records, as they automatically get saved in the blockchain and kept safely while ensuring the integrity of data. Since each block contains its own hash and the hash of the preceding block, that will be linked chronologically. Which makes it hard for anyone to temper the records on the blockchain network and cryptocurrency, as all the changes will be visible.

Safe and rapid cross-border payments

When the payee and the payer reside in different countries, they have to incur Cross-Border transactions. Making cross-border payments might be very challenging, and you might have to face issues like;

• Involvement of numerous intermediaries
• The current payment method might be less risky, but it’s more expensive due to high commissions.
• The prolonged payment processing time, as cross-border payments will take almost five days to process.
• Unclear personal data privacy regulations
• Lack of transparency.

But with blockchain payment processing, you can:

• Transfer payments from one country to another speedily. Furthermore, Blockchain payment methods will reduce payment processing time from days to even a few hours.
• Reduce the need of intermediaries in the entire payment process, as blockchain ensures the validity of payments along with transparency and security.
• All the transaction data on blockchain is immutable, that’s why it ensures the safety of payments and information.

Automation with smart contracts

People running companies and businesses are suggested to automate their transactions with smart contracts as it will be greatly beneficial for them. Smart Contracts will help them to:

• Reduce overall payment time
• Help them to facilitate prompt payments
• Automate payment flows.

While writing the smart contracts, you have to mention all the terms and conditions for transferring payment. After meeting the required credentials, the payment will be automatically paid to the concerned person.

The working of blockchain payment systems

The entire system of blockchain payments is not complex at all. Here we are depicting the entire working and process of a cross-border payment via Stellar Blockchain Payment System with a payment-specific example to depict the concept, How do blockchain payment systems work?.

Use cases of blockchain-based payment system:

Basically, there are so many use cases of Blockchain-based payment systems. Here we are discussing some Top Blockchain Payment Use Cases that are listed below;

Cross-Border Payments

The traditional cross border payments methods are secured, but they are expensive and sluggish. This method involves numerous intermediaries present within the system, leading towards the commissions ranging from 3% to 20% of the amount that is being transferred. But the cross-border payments with blockchain are;

• Secured
• Fast
• Less expensive
• Doesn’t involve any third-party authorizations

Famous banks using blockchain like Westpac have partnered with Ripple for implementing a blockchain payment system especially designed for cross border payments. While other banks and companies are planning to implement blockchain-based payment systems in their business for conducting fast and secure cross-border payments.

Trade Finance

Another use case of blockchain-based payment systems is Trade Finance. It involves financial activities linked with international trade. Trade finance requires a huge amount of paperwork and payment records of bills, invoices, payable amounts, credited amounts, account balance etc. Carrying out all these procedures will take lots of time because it requires several copies of the same paperwork for multiple uses. And any type of small manual error might become the reason for wrong documentation.

But thanks to payments via blockchain, the paperwork of trade finance will become more manageable as:

1. By eliminating manual effort of maintaining records of the payment details, bills and invoices.
2. Blockchain payment systems work as distributed ledger for all members, as they can easily access one single document.
3. It will remove the chances of manual errors as all payments will take place via blockchain payment system.

Digital Identity Verification

Current payment systems require you to verify your identity while conducting a transaction. Sometimes, the long verification processes might be irritating or very time-consuming that include record checking via repeated logins and video calls.

But the blockchain payment system has to make the process easy and less time-consuming with verified credentials of related people that will be saved in the system and doesn’t require repeated verification. Blockchain money transfer apps are unchangeable, that’s why authenticity of the data will be ensured. It will definitely speed up the digital identity verification because users don’t have to enter their verification credentials in the system again and again.

Peer-To-Peer (P2P) Transfers

Peer-to-peer transfers are meant to transfer payments or funds directly from one user’s accounts to the account of another user. Currently, there are lots of traditional P2P money transfer applications are present, but they possess various restrictions like:

• It will allow you to make payments within a specific region.
• Requires you to pay commission for sending a payment outside your current area.
• Requires you to save your information, that’s not safe.
• It doesn’t allow you to make cross-border payments.

But with the blockchain payments, the P2P payments and transfers become easy and less time-consuming;

• A blockchain payment system is decentralized. That’s why the security concern can be addressed expediently.
• You can conduct worldwide payment because blockchain doesn’t have any type of geographical limitations.
• All the blockchain transactions will occur in real-time. That will automatically increase the payment speed.

Digital Payment Solution of SVC:

At Saint Vincent Capital, we developed robust and secure blockchain-based payment solutions designed for enterprises and startups. Saint Vincent Capital LTD., a multinational group’s ecosystem, developing a world-class Blockchain digital platforms network and practical application ecosystem in promoting global economic growth and connecting global financial markets.

Fully decentralized and securely built digital platforms Network that leverages distributed ledger technology for the individuals to corporate, and business-class networks to economy-based business disruption.

We are providing the larger global access to businesses’ financial solutions through a diversified ecosystem developed on superior blockchain technology, global financial connection, foreign exchange trading on MT4 platform, Real Estate Exchange, Real Estate rental and leasing, payment gateway cross-platform, digital banking.

The entire ecosystem of SVC is backed up with REC Digital Platform based on Blockchain, unlocking the overall potential of the Fintech solutions, fully synchronized with DLT’s and Economy-based Blockchain Real-estate digital platform, Finexgm’s Meta Quotes Forex trading, and C-bank.

Conclusion:

Blockchain technology has completely transformed the payment industry, still, it continues to bring more innovations. Transactions are dispersed across various network nodes of computers, that make the payments very safe and secure, without any risk of data tampering or manipulation. Companies efficiently deal with the trials of centralized payment systems and form a devoted and skilled team to implement the blockchain-based payment system in their business to avail its multiple benefits.