{"id":266570,"date":"2024-10-22T09:07:22","date_gmt":"2024-10-22T09:07:22","guid":{"rendered":"https:\/\/imarticus.org\/blog\/?p=266570"},"modified":"2024-10-22T09:07:22","modified_gmt":"2024-10-22T09:07:22","slug":"future-of-cross-border-payments","status":"publish","type":"post","link":"https:\/\/imarticus.org\/blog\/future-of-cross-border-payments\/","title":{"rendered":"The Future of Cross Border Payments: The Impact of DLT and Blockchain Technology"},"content":{"rendered":"

Cross-border payments <\/span>are changing with the advent of Distributed Ledger Technology (DLT) and blockchain. These technologies will change how we conduct global transactions and reduce costs. The benefits? We reap the advantages of sped-up payments alongside increased transparency. This blog looks into the future of these payments and what it means for users.\u00a0<\/span><\/p>\n

Consider taking a <\/span>corporate banking program<\/span><\/a> for more insights and essential banking skills.\u00a0<\/span><\/p>\n

Cross Border Payments<\/span><\/h2>\n

These payments are money transfers between parties in different countries, often facilitated by banks or financial institutions. Historically, they have been slow, with multiple intermediaries, high fees, and long processing times.\u00a0<\/span><\/p>\n

The demand for faster and cheaper payment solutions has grown as the world becomes more interconnected.<\/span><\/p>\n

Here\u2019s an example of these payments to support this explanation:<\/span><\/p>\n

A small business in the US sells handmade crafts online. European customers who want to buy several items initiate a cross-border payment with their credit card.<\/span><\/p>\n

The process involves:<\/span><\/p>\n

    \n
  1. Payment initiation<\/b>: Customer enters their credit card details on the website.<\/span><\/li>\n
  2. Currency conversion<\/b>: The payment processor converts euros to dollars at the current rate.<\/span><\/li>\n
  3. Intermediary banks<\/b>: Payment requests go through multiple banks and financial institutions to facilitate the transaction.<\/span><\/li>\n
  4. Settlement<\/b>: This happens once the approved funds are transferred to the business\u2019s account without the transaction fees.<\/span><\/li>\n
  5. Confirmation<\/b>: Both the customer and business receive the transaction confirmation.<\/span><\/li>\n<\/ol>\n

    This shows <\/span>cross-border payments<\/span> are more complex, with multiple parties, currency conversions, and fees involved, than domestic transactions.<\/span><\/p>\n

    Distributed Ledger Technology (DLT)<\/span><\/h2>\n

    DLT is a digital system that simultaneously records transactions in multiple places for increased transparency and security. Unlike traditional databases managed by a central authority, DLT is a decentralised network where all participants can access and verify the same information.\u00a0<\/span><\/p>\n

    This is especially relevant to these payments as it can simplify the process and build trust between parties.<\/span><\/p>\n

    DLT in <\/span>Cross Border Payments<\/span><\/h3>\n

    Here are the advantages of opting for DLT in these payments.<\/span><\/p>\n