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International payments: the practical impact of blockchain

International payments: the practical impact of blockchain

For Patrick Mollard, co-founder and CEO of Fipto, blockchain is a powerful lever for transformation, particularly in the world of international payments.

The digital revolution has propelled businesses towards new horizons, and at the heart of this transformation, blockchain is emerging as one of the driving forces. One figure says a lot about this dynamic: according to the French Federation of Blockchain Professionals, more than half the companies in the SBF 120 (Paris Stock Exchange) are involved in blockchain projects.

Major challenge: payment in digital currencies

The growing craze for blockchain and the digital currencies that circulate on it represent major challenges, but also excellent opportunities. Additional cash management and payments in digital assets are crucial aspects to consider.

International transactions, which are often slow, opaque and costly, are finding in digital currencies a solution to simplify these processes.

The case of US bank JP Morgan, which has forged a speciality in payments via blockchain, illustrates these challenges well: the bank took an early interest in blockchain and launched its "JPM Coin" as early as February 2019. The largest commercial bank on the planet was one of the first to develop, back in 2018, its first blockchain-based payment network, called Quorum; since completed by Onyx, a blockchain infrastructure to facilitate and make efficient the transactions of the Siemens group.

The emergence of digital currencies in French listed companies (SBF 120) is not limited to mere interest; it is a response to the growing needs of businesses. While the management of financial flows is often perceived by companies as a rather cumbersome, complex and sensitive subject, technology then becomes an opportunity to optimise these processes.

High costs, long delays: blockchain as a transformative solution

Cross-border payments, which are generally costly, slow and error-prone, represent a major challenge; the global payments infrastructure is faced with complex coordination between multiple intermediaries, disparate regulations and compliance requirements.

This situation creates a gap between customer demand and the company's ability to provide appropriate solutions, resulting in cash flow problems. A somewhat Ubuesque observation at a time when, by comparison, players such as Amazon practice 'instant' delivery.

When you delve into the complexities of cross-border payments, the challenges turn out to be considerable logistical and regulatory barriers. Time zones, bank opening hours, exchange rate fluctuations, to which are added in particular the challenges posed by the low liquidity of currencies in emerging countries or the inflation of certain currencies (Argentina/Lebanon) complicate these transactions.

A traditional international transfer can take between four days and several weeks (if they go to emerging countries), leading to significant delays.

Companies, aware of this gap between demand and operational reality, are facing cash flow problems that directly impact their crucial transactions. By virtue of its decentralised nature and its ability to eliminate intermediaries, blockchain addresses these problems head-on. It doesn't just solve problems, it revolutionises the way cross-border payments are viewed.

The need for a solid regulatory foundation

The recent fall of FTX and Sam Bankman-Fried, an iconic figure in the cryptocurrency world, and the resignation of Binance's CEO mark a watershed moment in the industry. These events have caused significant upheaval, highlighting the crucial importance of robust governance.

In this changing context, regulation, once perceived as an obstacle, is emerging as a fundamental component for the adoption of blockchain in the business community.

This shift in perspective is also palpable in the traditional financial sector. Institutions, initially reluctant to embrace emerging technologies such as blockchain, now recognise the imperative of transparent and well-defined regulation.

In this dynamic, all market players, whether already involved in the use of blockchain or not, are incentivised to comply with regulatory standards. This compliance is crucial to ensure the integrity and legitimacy of the entire blockchain ecosystem.

In fact, the recent adoption of the MiCA ("Markets in Crypto-Assets") regulation by the European Parliament illustrates this trend towards stricter regulation of cryptoasset markets in Europe. This regulation aims to protect investors while preserving financial stability, fostering innovation and enhancing the attractiveness of the sector.

By embracing blockchain, businesses are opening the door to an era of more efficient, reliable and transparent cross-border payments. This transformation has only just begun, but it is inevitable.

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