B2B cross-border transactions will be on blockchain

Disclosure: The views and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of crypto.news editorial.

The world we operate in is changing rapidly and businesses are having to adapt quickly. Following the global pandemic, many corporate businesses were forced to look domestically as supply chains were hit and international trade became difficult. This has been compounded by geopolitical tensions affecting global supply chains. However, as new technology unlocks boundaries, both physical and metaphorical, many supply chains have begun to open up and are becoming increasingly stronger.

Despite this, the issue that is a constant ‘side issue’ for finance teams is cross-border payments. Moving any amount of money safely and quickly to different parts of the world without incurring excessive fees is a well-documented challenge from a consumer perspective. For businesses, the issues become more complex as the size and complexity of the transaction increases.

But there is a solution here. Digital currencies powered by blockchain technology are poised to revolutionize B2B interactions on a global scale and have the ability to eliminate these cross-border payment issues for businesses. They will offer secure payment opportunities at low fees, 24/7, 365 days, anywhere in the world.

At the beginning of October, online payments giant PayPal used SAP’s new Digital Currency Center to pay an invoice to Ernst & Young using its stablecoin, PayPal USD (PYUSD). Examples like these show the increasing adoption of digital currencies and blockchain technology by global firms, of which cross-border payments are a concrete use case.

Challenges faced by corporate businesses

Legacy infrastructure supporting cross-border transactions can be cumbersome, expensive, and fraught with compliance challenges. Businesses of all sizes are feeling this pressure intensely, and digital currencies can solve many of the problems these businesses face. When I talk to our customers, it’s clear how digital money payments can help them. The three most frequently cited major challenges are:

Speed ​​and accessibility: Traditional payments can only be made during banking hours, and customers need to pay attention to closing times. They may also take several days to resolve, especially when they are complex in nature or high in value. In contrast, transactions with digital currencies can be completed almost instantly. This speed is particularly important for large companies that need to move large amounts of money across borders on weekends, for example, to complete a merger and acquisition transaction.

Cost efficiency: Businesses often face high transaction fees and unfavorable exchange rates when trading internationally. These costs can add up quickly and impact profitability. Digital currencies can significantly reduce transaction fees because they eliminate the need for multiple intermediaries.

Regulatory compliance: We are seeing increasingly complex regulatory environments globally. Navigating multiple different geographies further complicates this issue. Digital currencies can increase transparency and traceability, making it easier for businesses to comply with local and international regulations. Blockchain’s immutable ledger provides a reliable audit trail, facilitating compliance and reducing the risk of fraud.

Efficiency and savings for corporate businesses

If the three challenges listed above are solved through blockchain technology and digital currencies, enterprise businesses can significantly streamline their operations with net cost savings. But the benefits are much broader:

Improved cash flow management: Faster transactions lead to better cash flow management. Businesses can receive payments in real-time, increasing liquidity and allowing for more strategic investments and operational flexibility.

Ability to create new business models: It allows businesses to differentiate their offerings by establishing new consumption or subscription-based business models that involve more frequent invoicing with lower payment amounts, especially for smaller payments, at significantly lower costs.

Reduced risk of fraud: Fraud and cybercrime are significant risks in cross-border transactions. The decentralized nature of blockchain ensures that no single entity has control over the entire system. Every transaction is recorded on a public ledger and cannot be reversed, so fraudulent chargebacks are not possible.

Looking to the future, how can we get there?

The points I listed above provide just a snapshot of why I believe we will start to see more and more enterprise B2B payments occur with stablecoins on the blockchain. The combination of savings, operational efficiency and security benefits are too great to ignore. However, there is still a long way to go before blockchain-powered enterprise stablecoin payments become the norm.

To realize the full potential of blockchain in B2B cross-border transactions, businesses need to take conscious steps to integrate this technology into their operations. The first step towards this future is for leaders to educate their teams on the benefits and functions of blockchain technology and digital currencies, especially stablecoins. This understanding will facilitate smoother transitions and greater involvement within the company.

Before full-scale implementation, businesses need to run pilot projects to test payments with stablecoins in controlled environments. This approach allows organizations to identify challenges and measure the effectiveness of the technology for their specific use cases. Partnering with crypto custody providers and exchanges, as well as business application providers, can help businesses solve any integration issues and provide valuable expertise and resources.

I believe that the future of B2B cross-border corporate transactions is undeniably intertwined with blockchain technology. Moving forward, the call to action is clear: Businesses should consider evolving their financial strategies and leveraging the power of blockchain and stablecoins for payments. The benefits are significant.

Cedric Bru

Cedric Bru is the CEO of Taulia. In this role, Cedric drives growth worldwide, increases market penetration and identifies new business opportunities. Since joining Taulia in 2013, Cedric, who previously served as the company’s Director of Sales, has helped Taulia triple its revenue two years in a row, establish strategic international partnerships, and help the company achieve a 100 percent customer retention rate. Prior to Taulia, Cedric served as Head of Global Sales, Marketing and Business Development at Visa’s Syncada. Cedric has over twenty years of experience in the financial services and software industries, including positions at Visa and Hewlett-Packard.