The future of B2B cross-border transactions is on the blockchain | Opinion

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As a seasoned analyst with over two decades of experience in the financial services and software industries, I have witnessed the evolution of global business transactions from close-up. The recent developments in blockchain technology and digital currencies have caught my attention, particularly in the context of cross-border payments for enterprises.

In today’s world, change is happening at a breakneck pace, necessitating quick adjustments from businesses. After the global pandemic, numerous enterprises found themselves needing to focus on their home market due to disruptions in supply chains and complications with international trade. This predicament was further aggravated by geopolitical conflicts, which have been causing problems for global supply networks. Nevertheless, many supply chains are now reopening and growing stronger as new technology facilitates border crossings, both literally and symbolically.

Despite this, one persistent issue for finance teams is dealing with cross-border payments. Effortlessly transferring money across different regions without incurring hefty fees or delays has been a recurrent concern, particularly from the consumer standpoint. However, these issues escalate significantly when corporations are involved due to the magnitude and intricacy of transactions.

In another approach, it’s worth noting that there is an innovative solution at hand. Blockchain-based digital currencies are set to transform business-to-business interactions globally, effectively addressing cross-border payment issues businesses often face. These digital currencies enable transactions around the clock, every day of the year, with enhanced security and minimal fees, making global payments more accessible than ever.

In early October, the digital payment leader PayPal employed SAP’s fresh Digital Currency Hub to settle an invoice with Ernst & Young through its stablecoin, PayPal USD (PYUSD). Such instances demonstrate the growing acceptance of digital currencies and blockchain technology among international corporations, with seamless cross-border transactions being a practical application.

The challenges for enterprise businesses

As a crypto investor, I often find myself grappling with the complexities and costs associated with traditional systems designed for cross-border transactions. These legacy infrastructures can be burdensome, costly, and riddled with compliance hurdles that businesses of all sizes struggle to navigate. However, digital currencies present a promising solution to many of these challenges faced by enterprises.

Speed and Convenience: Conventional payment methods are limited to business hours and require attention to closing times. Moreover, they may take several days to be processed, especially when dealing with complex or high-value transactions. On the other hand, digital currency transactions can be processed almost immediately, which is crucial for large corporations that need to transfer substantial sums of money across borders, say on a weekend, to finalize a merger and acquisition deal.

As a crypto investor, I’ve found that digital currencies offer a major advantage over traditional methods: cost efficiency. When it comes to international trade, high transaction fees and less-than-favorable exchange rates can add up swiftly, affecting profit margins. However, digital currencies cut down on these costs by removing the need for numerous intermediaries, making transactions cheaper and more streamlined.

Regulatory Compliance: As the world becomes more interconnected, regulatory landscapes are growing in complexity. Managing various geographical jurisdictions only adds to this challenge. Digital currencies can improve transparency and traceability, making it simpler for businesses to adhere to both local and international laws. Blockchain technology’s permanent record ensures a dependable audit trail, thereby facilitating compliance and minimizing the chances of fraud.

Efficiencies and savings for enterprise businesses 

Solving the three issues mentioned earlier with blockchain technology and digital currencies could lead to a substantial simplification of enterprise business operations, offering undeniable cost reductions. However, these advantages extend far beyond just streamlining; they also encompass a much wider range of benefits:

Streamlining transaction processes results in efficient cash flow management. This means enterprises can get their funds instantly, boosting their liquidity and enabling them to make smart investment decisions and operate with greater agility.

Capacity to create innovative business structures: By reducing expenses, particularly in small transactions, businesses can develop fresh consumption or subscription-based systems that feature regular billing with minimal payments. This enables them to stand out by offering unique services.

Minimizing Fraud Occurrence: Cross-border transactions can expose businesses to risks such as fraud and cybercrime. Blockchain’s unique decentralized structure prevents any single entity from controlling the entire system. Each transaction is logged on a public record called a ledger, making it impossible to reverse fraudulent transactions or perform chargebacks.

Looking to the future—how do we get there?

The points I’ve listed above provide only a snapshot of why I believe we’ll start seeing more and more enterprise B2B payments take place on the blockchain with stablecoins. The savings, operational efficiency, and security benefits combined are too much to ignore. However, there’s still a long way to go before blockchain-enabled enterprise stablecoin payments become the norm. 

To fully leverage blockchain’s capabilities in B2B cross-border transactions, businesses need to strategically incorporate this technology into their day-to-day activities. The initial move towards this future involves enlightening team members about the advantages and workings of blockchain technology and digital currencies like stablecoins. This knowledge will pave the way for easier transitions and increased internal acceptance.

Before launching widespread usage, it’s wise for companies to first run test trials of making payments using stablecoins in managed settings. This method enables organizations to pinpoint potential problems and assess the technology’s efficiency for their specific purposes. Collaborating with crypto custody services, trading platforms, and software application providers can assist businesses in overcoming integration hurdles and offer essential knowledge and resources.

It’s indisputable that blockchain technology will play a crucial role in shaping the future of B2B cross-border transactions. Moving ahead, it’s advisable for businesses to reassess their financial strategies, leveraging the potential of blockchain and stablecoins for payments. The advantages are substantial.

Cedric Bru

Cedric Bru is the CEO of Taulia. In this role, Cedric drives worldwide growth, increasing market penetration and identifying new business opportunities. Since joining Taulia in 2013, Cedric, who previously served as the company’s Chief Sales Officer, has helped Taulia triple its revenue for two consecutive years, built strategic international partnerships, and helped guide the company to a 100 percent customer retention rate. Before Taulia, Cedric served as Global Head of Sales, Marketing, and Business Development at Syncada from Visa. Cedric has over two decades of experience in the financial services and software industries, including positions at Visa and Hewlett-Packard.

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2024-12-10 15:08