Today, cross-border payments are slow, inefficient and costly, with the transfer of money between countries dependent on “an archaic network of corresponding banks”. According to the World Bank, these remittances cost a whopping 6% of the total transfer value, with digital channels accounting for less than 1% of total transaction volume.
A recent confluence of factors will enable blockchain-based payments to happen in 2023, especially in the areas of merchant settlement and cross-border transactions. First of all, major jurisdictions in the world are progressing with their stablecoin regulations. In addition, banks are beginning to adopt digital assets with many looking to create their own stablecoins. The use of stablecoins is also becoming mainstream.
Merchant settlement has already seen traction in the second half of 2022. Regulated payment service providers such as Worldpay and Checkout.com are creating offerings for a new generation of customers as merchants look to streamline business operations. Checkout.com has seen over $1bn in merchant settlement via stablecoin since launching their product with Fireblocks in June.
In the upcoming year, cross-border payment is where we will see the highest adoption in blockchain technology. The majority of businesses in the world need to move funds across borders, whether it’s moving funds within the company or paying vendors. Blockchain and digital asset payments reduce cross-border settlement times by 90% and fees by over 80%, making it one of the most obvious and tangible use cases that will see traction in the new year.