Blockchain has already racked up a long list of triumphs, but the ledger technology's success in making payments might be its most impressive achievement of all. Christopher Mager, Head of Global Innovation at BNY Mellon, believes blockchain could lead to an “unprecedented period of change and transformation” in global payment systems — and he isn’t alone.
Blockchain's primary feature is its efficiency. Because the core idea of a Decentralized Ledger Technology (DLT) is to forego centralized institutions (like banks), paying on a blockchain is as easy as clicking "send." No money transfer waiting periods or unnecessary third-party processing fees. Blockchain-based cryptocurrencies can be transferred (and recorded for auditing purposes) instantaneously across the world, increasing liquidity and efficiency in the markets.
The fluidity of blockchain and its smart contract system are two more factors that make blockchain an attractive technology for payments. Ledger technology works on an instantaneous system of smart contracts, where both parties enter into an immutable agreement (in this case, an individual who is transferring money to another entity). If one party cannot carry out the specified details in the contract, the contract immediately resolves and transfers all money back to pre-contract levels, which in turn creates a sense of trust around all payment transfers.
Blockchain’s universality also makes it a top choice for international payment processing. Transferring cryptocurrencies breaks down the physical borders and separate laws that currently govern each fiat currency. Because everyone can own crypto, blockchain makes it simpler to transfer and consolidates regulations under one unified system for the entire international community. A study done by Credit Suisse notes that it can take days to clear traditional cross-border wire payments, which carry fees as high as 10%. American Express believes that blockchain can solve this problem and "will support real-time domestic and cross-border payments at lower costs versus traditional services."
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These nine companies are using blockchain to revolutionize the way we pay and transfer money all over the globe.
How it’s using blockchain in payments: Airfox is a decentralized platform that lets those in underbanked parts of the world make payments, receive small loans and send money all over the globe. The Ethereum-based platform uses the company’s AirToken to help facilitate peer-to-peer payments for utility bills, goods and services.
Industry Impact: Airfox struck a deal with Brazilian retail giant Via Varejo to deploy its digital banking and payment platform in its stores. Airfox plans to release an app in 2019 to bring its digital payment platform to Via Varejo’s 50 million customers.
How it’s using blockchain in payments: Circle Pay blockchain allows for the safe transfer of money between different individuals, currencies and countries. The Circle Pay function is available in 29 countries and in U.S. dollars, Euros and British Pounds. Each money transfer or payment is encrypted on a blockchain to ensure a safe transaction.
Industry Impact: The Circle Pay app acts as a group messaging app with a payment feature integrated within. In-between sending your friends selfies or memes, you can also transfer money cross-border and cross-currency without any fees.
How it’s using blockchain in payments: Zcash is a cryptocurrency exchange platform using its own cryptocurrency (Zcash) to help people pay for goods and services. You can use the company’s crypto to buy a house, purchase electronics or even to donate to a nonprofit.
Industry Impact: Zcash already boasts a wide list of companies that accept the crypto. Companies accepting the digital currency as payment are in industries like apparel, web services, medical, restaurants/coffee shops and nonprofit.
Location: San Francisco
How it’s using blockchain in payments: Ripple’s blockchain lets users send money and make payments across the globe. The company’s RippleNet platform facilitates the quick transaction of payments and requires lower capital amounts for cross-border payments. The company boasts a network of more than 175 banks and commercial platforms that use RippleNet for cross-border payments.
Industry Impact: Payment provider TransferGo announced it was using Ripple’s RippleNet payment platform to launch a remittance corridor to India. With Ripple’s platform, TransferGo is hoping to speed up its Europe-to-India payment processing from 2 to 3 days to just a few seconds.
Location: San Francisco
How it’s using blockchain in payments: Veem is a blockchain-backed payment platform for small businesses to send and receive money in local currency. The company’s ledger technology secures, tracks and reconciles payments, so small businesses have a transparent history of all incoming and outgoing payments.
Industry Impact: Veem has seen its blockchain-based payment transactions double from a year earlier. They now account for more than 62% of the company’s total transactions.
Location: Beverly Hills, Calif.
How it’s using blockchain in payments: Ivy is a blockchain-based technology for international crypto business payments that need verification. Businesses use the IVY token to facilitate the transfer of digital assets and access 74 identifiable know-your-customer (KYC) data points, which lets them receive transparent payments from carefully-vetted sources on the blockchain.
Industry Impact: Ivy recently announced a partnership with Goldfields Money, an Australian digital bank, to commercialize and spread the use of Ivy’s blockchain payment system to an international community.
Location: San Francisco
How it’s using blockchain in payments: Gluwa uses blockchain for their borderless financial platform. The company combines a payment function with a digital wallet to help users manage and easily transfer money to people all over the world.
Industry Impact: Gluwa users can trade the company’s Gluwacoin for fiat currency at a 1:1 fixed rate. The stablecoin acts as a bridge between the crypto and fiat worlds due to its compatibility with real-world currencies.
Location: San Francisco
How it’s using blockchain in payments: Stellar’s blockchain payment platform fights poverty by connecting people and low-cost financial institutions. The Stellar network features lower remittance costs, mobile banking, real-time settlements (in 2-5 seconds) and an automatic currency exchange.
Industry Impact: Consulting giant Deloitte uses Stellar to test out different payment methods for banking clients outside North America.
Location: Mountain View, Calif.
How it’s using blockchain in payments: Abra’s peer-to-peer platform lets users transfer digital currencies to other users using blockchain. Abra users can fund their digital wallets with 50 different fiat currencies or more than 30 different cryptocurrencies, including Bitcoin, Litecoin, Zcash, Augur and Stellar.
Industry Impact: Residents in the Single Euro Payments Area (SEPA), as well as European Union nations, can now transfer euros or other national currencies into their digital wallets on Abra.