International payments have been around for a long time in the financial world, easing commerce and trade. The increased amount of foreign payments can be ascribed to today’s rising worldwide commerce, whether it’s sending money back home or signing international company contracts.
It is a crucial ally for firms and individuals that seek to engage in cross-border commerce or transactions. Since the internet’s widespread use, the growth of cross-border B2B payments has been exponential. Every year, almost $2 trillion in cross-border payments are made by millions of firms all over the world. SWIFT is the most prevalent method for US firms to transfer funds across borders, however, it takes a long time and costs a lot of money.
Our goal at BlockX is to provide an open network for moving value worldwide using standard instructions, making B2B payments more modern and transparent. Like SWIFT, but digital, modern, and rapid — and accessible to everyone.
How Cross Border payments happen
SWIFT has connected more than 11,000 financial institutions in more than 200 countries and territories, facilitating cross-border payments and supporting economic development around the world, since it established common standards for financial transactions and a worldwide network in 1973.
The system, however, is antiquated, inefficient, unreliable, and expensive, especially now that blockchain technology has arrived. An average international payment, for example, takes 3–5 days, and 4% of SWIFT payments fail right now. This causes a great deal of irritation for both businesses and their customers, especially in the age of worldwide e-commerce, where every second counts. At BlockX, we combine the international wire and currency conversion processes into a single path, allowing for faster and more efficient transactions.
Traditional B2B payments
The service provider chooses how they want to be paid in most B2B transactions, which is typically a bank-to-bank protocol, in which the customer works with their own bank to complete the payment, and the correspondent bank in the middle converts the currency, determines the foreign exchange rate, and charges costs.
The average settlement period is 2–5 business days, depending on the banks and countries involved, and costs might reach 6%. At BlockX, you can complete a transaction in a fraction of time and for much lower costs compared to the average without a worry of Banking fees and high exchange rates.
Traditional B2C/B2E payments
In most B2E or B2C transactions, the paying company or marketplace determines how the money is exchanged. To comply with local tax and employment regulations, employers will typically use an international payroll service (such as FMP, Velocity, or Deel). Both sides will be decided by marketplaces, which will accept specific payment ways from customers and also include workers/service providers.
Since these processes involve much more time-sensitive and smaller amounts, we at BlockX allow much faster and efficient transactions to ensure a smooth experience using Blockchain technology for cross-border payments.
The BlockX Solution
We combine the capabilities of a frictionless, blockchain-based payment channel with local partners to provide on/off ramps to all major currencies. These local partners move value on the network while accepting and paying out traditional money in their local region.
Without the need for an intermediary bank, both the service provider and the buyer can transact in their own local currency. Essentially, we combine the international wire and currency conversion processes into a single step.