International trade barriers have been decimated by globalisation. Global payment trends indicate the value of cross-border payments could reach $250tn by 2027.
While some traditional payment methods have inefficiencies and cannot keep pace with demand, in recent years blockchain payment methods have managed to offer a solution. Let’s learn how.
The impact of globalisation
With globalisation comes fresh ideas and streamlined solutions which all respond to evolving industries and current demands. Some of the most significant advantages for businesses and individuals that have been brought along by these shifts include:
Access to global markets
Globalisation enables goods to be manufactured worldwide, fostering reduced costs and specialisms. In turn, this raises the average standard of living and allows people to acquire higher-quality products for similar prices.
However, the rising quantity of international transactions can strain traditional payment methods, resulting in increased settlement times and higher costs.
Cross-border payments
A significant impact of globalisation is the increase in the number of people making cross-border payments. In the modern world, people shop and trade internationally through the Internet. However, the current system suffers from cross-border payment inefficiencies, which hinder business growth.
The average cost of cross-border payments is around 4-6% of the transaction, which can substantially increase costs and prevent businesses from transacting internationally. Blockchain payment methods aim to reduce these costs by eliminating intermediaries.
Settlement times
With the number of cross-border payments increasing, the demand for faster, more efficient transaction settlement has grown exponentially. People are no longer happy waiting a week to receive a payment or goods.
Globalisation has sharply raised our expectations when transacting internationally. However, while traditional payment methods struggle to keep up, blockchain alternatives could make transactions even faster.
How the blockchain compares to traditional payment methods
While traditional payment methods are sluggish and expensive, blockchain-based alternatives offer several key benefits:
Security and privacy
While traditional payment methods are centralised (meaning the transaction and data are controlled by a central authority), blockchain payments are entirely decentralised, so transactions cannot be manipulated, and data cannot be leaked or used for advertising.
While traditional payment methods are reversible and can be altered by a central authority, blockchain payments are immutable, permanent, and public. As such, a malicious actor cannot falsely claim a payment has occurred or try to initiate a chargeback after the sale concludes.
Transaction speed
An increasing number of businesses are leveraging blockchain technology in response to the growing demand for security and fast transaction settlement. International SWIFT payments typically require one to five days to complete, whereas a blockchain-based payment can settle in seconds.
However, crypto payment gateways enable businesses to accept crypto payments at checkout 24/7, almost instantly, with minimal fees or delays. They support multiple languages and cryptos, enhancing accessibility. Moreover, a significant use case for stablecoins is reducing settlement times by up to 90% vs. traditional methods
Cost efficiency
Blockchain payment methods offer substantial cost savings compared to traditional methods. A PYMNTS Intelligence report in 2024 indicated that blockchain could reduce transaction fees by as much as 80% through the elimination of intermediaries like banks, payment processors, and currency exchange services, which are commonly used by traditional payment methods.
Moreover, there are no additional fees associated with international blockchain-based payments, so they’re highly efficient for cross-border or foreign currency transactions, which benefits companies conducting business globally.
Conclusion
Globalisation has significantly impacted international trade. It has connected people around the globe, but in doing so, traditional payment methods have been pushed to their limits.
However, blockchain payment systems present a solution. They’re designed with global trade in mind, allowing them to eliminate excess fees and facilitate low-cost cross-border payments. The impact of globalisation is clear, and crypto payment methods are perfectly tailored to meet its demands.
