Blockchain is a friction-less platform that is currently gaining popularity across various industries, including financial services, BFSI, retail, healthcare, manufacturing, and more. For staying competitive and meeting the ever-growing consumer needs, market leaders across sectors are exploring technology solutions. The payment processing industry is no exception. Recently, due to the potential of blockchain solutions development to substitute intermediaries and enable faster digital payment processing, technology has witnessed a growing number of advocates in the industry.
However, the question arises that how businesses can seamlessly implement blockchain fintech development to reap long-term benefits in payment processing. This article discusses crucial principles about blockchain implementation in payment processing. Discover how it enables the processing of payments in a faster, secure, and digitized way.
Traditional Payment System Challenges
The existing payment infrastructure is largely message-based and relies on multi-party file exchange. A standard cross-border lifecycle of non-euro payments requires processing through multiple phases. It takes from weeks to days to complete. For instance, because of this delay, it requires a business initiating a payment to monitor its bank account or bank account statement to get its clearance status.
Blockchain Applications | Payment Processing Systems/Solutions
Advanced International Reconciliation
SWIFT completed a proof of concept (PoC) with 34 global banks to determine whether Nostro reconciliation could be used with Blockchain. Nostro/Vostro accounts where a bank in a few countries does not directly offer services. It does so through a correspondent bank. The PoC concluded that, if implemented globally by all the participating banks, blockchain could effectively facilitate automated real-time liquidity tracking and reconciliation.
Frictionless Card Payment Solutions
Card payments for shoppers are a convenient, cashless payment choice, but merchants receive a high transaction fee. There are intermediaries, including acquirers, payment gateways, exchanges (Visa/Master), and issuers (cardholders’ bank). There will be no need for too many authoritative bodies because there is no central authority in a blockchain network. It assists retailers to pay less for service costs and transaction fees and provide consumers higher discounts in exchange.
Secure and Fast Cross-Border Payment Processing
When traveling from one country to another, cross-border payments have to move through many banks. It boosts the fees involved in making them. Mastercard has developed a blockchain-based solution that connects the sending and receiving bank directly. It does not involve intermediaries with this settlement network. They can achieve this without using any cryptocurrency, as well as enable fund transfers as fiat currencies. Likewise, FinTech provider R3 is working with 22 banks to develop a solution for real-time international payments that use Distributed Ledgers to allow cross-border payments that are quick, efficient, and cost-effective.