How Does Blockchain Support Faster Payment Processing? - An Overview
Hey! If you live in the early 21st century, you may have certainly wondered how our lifestyle is changing & constantly evolving day-by-day. Certainly at some point in time, you would have compared your past to your present. Our lifestyle, food habits, daily routine, business sectors, IT industry, technologies, and almost everything finds drastic growth. Today we are going to concentrate on the evolution in the payment sector by blockchain technology.
If you are a guy who is a blockchain freak or have a considerable amount of knowledge in the Fintech, banking industry, or a technophile, then you will find this article more relatable and interesting. Come on, let's get started!
Blockchain technology promises to fulfill all our dreams come true by making a light speed cash transfers in fast, secured, & affordable transferable options. Payment via blockchain makes our lifestyle smoother as it carries out encrypted safe international transfers. Adding upon to it, making real-life trusted & verified transfers is simple & quick in all terms.
It bridges the gap between both the fintech industry and the common people like us. Before digging this topic in deep, have a quick look about blockchain!
Blockchain In Payments
In short blockchain is defined as the distributed ledger and it is immutable to change or hack. Cheating and fraudulent activities can be strictly avoided with blockchain as it is impossible to change. It is distributed across the networks and each node processes a set of transactions and it is simply referred to as “blocks”. Blockchain makes the set of transaction records more transparent and manages every set of data in the database. In correlating with the payment sector, every payment is managed perfectly as the distributed ledger tracks every set of payment records.
With blockchain success starts hitting automatically as it earns trust among people. One who wishes to start a business they can integrate it with the underlying blockchain principle to create a trustworthy network. One of the main advantages that hides behind blockchain technology is that “No one takes control & charge”. In the banking system it is exactly opposite to it, every transaction is monitored and controlled by the middlemen while blockchain adds evolution to the payment system by taking full control of it. It eliminates the interference of people by making it controlled by the predefined set of functionalities.
Major Issues In Traditional Payments
- Payment Frauds and Chargebacks
- Delayed Cross-border Transactions
- Low Card Data Security
- Difficulty in Currency Conversion
- Lack of Proper Technical Integration
- High Processing Fees
- Complex Financial Regulation Across Territories
- Low Customer Satisfaction
- Increasing Cyber Attacks
- Repetitive KYC Procedures
Big Billion Benefits Of Blockchain In Payments
By considering the above pitfalls, blockchain in payment is meant to solve the above problems faced by real time. New opportunities and the enriched set of features can be enriched by the users. The network is extremely safe as it safeguards it from both internal and external attacks. No central authority to control is another major plus in the payment system via banking. Corruption can be strictly avoided as there is no middleman to process transactions. In addition to it transparency is more when compared to the traditional financial transaction systems. The above feature is loved by most of the users.
How Blockchain Accelerates Payment Services?
Speeds Up International Payment Processing
Blockchain is the perfect solution to carry out B2B payment transfers as it is developed to process international transfers. It completely cuts off the need for local banking infrastructure. Main motive of blockchain in payments is to accelerate successful payments by reducing transaction price. As a result, people can rely on blockchain for large scale transfers from any remote locations across the world.
Lower Cost Of FinTech Trades
Ever wish to make trade happen in a cost-effective way?
It is possible with blockchain as it cuts the cost by making blockchain transfers in a time consuming way. When a person approaches the bank it takes off too much time and effort as there may be many paperwork to be completed before the transaction happens. But in the case of this concept it is exactly opposite to it, as blockchain is meant to save time by executing transfers based on a predefined set of programs.
Auto Executing Contracts
The backbone of blockchain transfers is the “Smart Contracts”. It has the capability of carrying out the self-executing transfers by automatically executing payments when a particular set of conditions is met.
How Do Blockchain Payment System Work?
Use Cases Of Blockchain In Payments
Check out the use cases of blockchain in the payment sector.
Digital Identity Verification
Digital identity verification procedure is more complex than you think, in real life it is an extremely lengthy process and it cannot offer 100% security. Whereas blockchain carries this process as an automated one. People can handover their documents and details for verification blockchain will verify it and create an exclusive digital identity for you.
High Data Security
Data with high data security is great right? Blockchain takes security as the top most priority and offers a secured network process for storing customers information. Except the owner no one is able to access their data.
Better Anti-Money Laundering (AML) Protocols
Due to the lack of these protocols, Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) protocols, many fraudulent activities takes place. Many banks face this issue so to get away from these problems blockchain supports you with these above protocols. Any kind of illegal activities can be prevented in advance by making the maximum use of these protocols.
Automated Know Your Customer (KYC) Processes
Basically the KYC process is time taking and requires lots and lots of paperwork and documentation while KYC in blockchain is different from it. Only once a user needs to give their details and the upcoming process is automated. A distributed ledger stores that information in the form of processed data.
Faster Cross-Border Transactions
Negative results are faced for processing cross-border transactions. A business in large scale basically processes bulk transfers but it is unconventional for all to carry out massive international transfers within a short duration. It can affect the business so payments in blockchains are developed with the intent to deliver fast transactions in a limited period in time. It saves time by improving the efficiency of transactions.
Peer to Peer (P2P) Transfers
Blockchain offers full freedom to process P2P transfers. A user can directly pay to the user at the other end without the need of the central authority. A complete freedom is offered to making transactions.
Reduced Processing Fees
Processing fees have become a big burden as it increases day by day. To cut short it blockchain eliminates middlemen so there won’t be any processing fees.
Protection Against Cyber-crimes
Normally it is quite easy to steal money as some companies do not pay attention to security protocols and norms while in blockchain cyber attacks never happen. It makes it secure anti-DDoS attack applications can help you from preventing it from attack.
List Of Companies Who Use Blockchain In Payment Sector?
- Intesa Sanpaolo
- Banco Santander
- ING Bank
Future Prospects Of Payments In Real Life
Blockchain has already offered many more progressive growth by finding a solution for every problem faced by the normal payment system. Interestingly it’s contribution will be more in the upcoming days as blockchain technology has started being accepted by the common people. The blockchain industry has the power to change the fintech industry in the future. Many entrepreneurs have taken their step by creating their own ecosystem in the payment sector on blockchain. Even you can be the next successful individual player by making a footprint in the blockchain on the payment system.
How Can Sellbitbuy Help You?
Sellbitbuy is here to offer endless support for the one who aims to start a payment system on the underlying blockchain technology. You can approach our team for development based & technical support in this concept. Further, more queries then you can talk with us!