Blockchain for Cross-Border Payments
scnsoft.com/blockchain/cross-border-payments
Blockchain for Cross-Border Payments: The Essence
When used for cross-border payments, blockchain provides payment processing in
seconds rather than days, drives a 40–80% reduction in transaction processing
costs, and ensures topflight security and end-to-end traceability of payment-related
data.
Cross-Border Payments on Blockchain: Market Info
Cross-border payments and settlements are considered the most prominent blockchain
use case. According to the IDC Worldwide Blockchain Spending Guide, it accounted for
15.9% of the $4.67-billion blockchain market in 2021. With the expected growth of the
global blockchain market from $7.18 billion in 2022 to $163.83 billion by 2029, the
segment of blockchain-based cross-border payments is anticipated to show the
corresponding increase.
Juniper Research estimates that B2B cross-border payments on blockchain will account
for 11% of the total B2B international payments by 2024. The main driver for the
popularity of blockchain payment solutions is their ability to provide fast, secure,
transparent, and cost-effective processing of cross-border payment transactions.
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How Blockchain for Cross-Border Payments Works
Architecture
It is blockchain’s innovative architecture that drives the advantages of blockchain-based
vs. traditional cross-border payments.
Compared to international bank transfers, blockchain offers substantially lower
transaction processing costs due to eliminated intermediaries (e.g., commercial
banks, clearing houses, etc.). Plus, there are no cut-off times for payment processing,
which results in drastically increased processing speed.
Compared to the independent e-payment systems such as PayPal or MoneyGram,
blockchain provides much more robust security of sensitive data and eliminates the
risk of data leakage. Also, blockchain money transfer is fully transparent, which
contributes to the mutual trust between payers, payees, and cross-border payment service
providers.
A sample architecture of blockchain-based cross-border payment solutions ScienceSoft
delivers looks as follows:
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Cross-border payment transactions are submitted by the blockchain network members or
automatically enforced by smart contracts upon predefined events. The requested
transaction is transmitted to the peer-to-peer (P2P) network of nodes that validatethe
transaction according to the selected consensus protocol. Traditional financial
institutions and large businesses dealing with high-value transfers mainly rely on
permissioned blockchains. In such networks, only known and trusted users with
special rights can access and validate payment events and transactions. Fintech
companies and SMEs focused on smaller-value B2B and C2B transactions usually opt for
permissionless blockchains to promote financial inclusion and ensure maximized
payment transparency.
Upon validation, payment-related data is encrypted with a hash function and stored in
timestamped blocks linked chronologically. The blocks form an immutable ledger
that provides a single source of truth to trace payment activities. Individuals, businesses,
and financial services providers interact with a blockchain to make, receive, and monitor
payments using role-specific web and mobile applications. All the participants
maintain their own up-to-date copies of the distributed ledger.
A blockchain solution typically requires integration with financial data marketplaces
and accounting software. Additionally, the solution may be integrated with:
Business-specific systems where payment initiation takes place, e.g., core banking
software or ecommerce platforms.
A payment analytics system to share relevant data required to analyze cross-border
payment transactions and payers’ behavior.
Main use cases
B2B cross-border payments
Key benefits:
Fast and secure global B2B payments, including high-value interbank settlements
and P2P business payments.
Eliminated manual errors and payment delays due to cross-border payment
automation.
Compliant financial reporting under different jurisdictions due to immutable
records of payment-related data.
C2B cross-border payments
Key benefits:
Prompt and convenient international payments in crypto and fiat for individuals.
Low payment cost due to no need for third parties, such as governmental entities or
financial institutions.
Minimized risk of security breaches.
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Improved transparency and streamlined control of payment operations due to full
visibility of money transfer transactions.
Key features
ScienceSoft creates blockchain-based cross-border payment software with unique
functionality closely bound to the specific payment needs of each client. Here, we share a
sample feature set of the blockchain solutions we create:
Real-time processing of cross-border payments
Blockchain offers near-instant processing of cross-border payments on a 24/7 basis with
no involvement of intermediaries.
Multi-currency support
Blockchain can support cross-border payments in any cryptocurrency of your choice,
including custom cryptocurrency.
Consensus-based validation of payment data
Blockchain provides rule-based validation of cross-border payment transactions and their
prioritization for processing and storage. The rules are defined by the selected consensus
protocol.
Automated recordkeeping
Upon successful validation, payment transactions and relevant data from the connected
systems (e.g., data on currency exchange rates) are automatically timestamped and
recorded in the immutable ledger.
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Full traceability of cross-border payments
The blockchain ledger enables real-time monitoring and end-to-end traceability of cross-
border payments for the blockchain network members.
A comprehensive audit trail of payment-related documents
Blockchain keeps an immutable record of all manipulations across payment-related
documents (invoices, receipts, letters of credit, etc.): document creation, editing, sharing
between the parties, viewing, and more.
Payment automation enabled by smart contracts
Smart contracts contain the rules for triggering and automated enforcement of particular
cross-border payment transactions. For example, they can initiate automated payment to
the foreign service provider upon service delivery.
Payment security
Security of the blockchain payments is achieved via payment data hashing, transaction e-
signing with a unique digital signature, multi-factor authentication, including biometric
authentication (e.g., facial or fingerprint recognition), fraud detection algorithms, and
more.
Success Stories of Blockchain for Cross-Border Payments
Banco Santander Benefits from Faster and Cheaper Cross-Border
Transactions
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In 2018, Banco Santander, a banking giant serving 140M+ customers worldwide,
partnered with Ripple to launch One Pay FX, a blockchain mobile app for cross-border
payments. The innovative solution offers automated currency conversions, provides real-
time processing of cross-border payments, maintains an immutable record of all
transactional data.
With the help of blockchain, Banco Santander managed to reduce the processing time for
international bank transfers from 3–5 days to seconds and substantially decrease the
fees for cross-border transactions. Also, the bank saw enhanced customer satisfaction due
to full transparency of FX rates and transactional flow.
One Pay FX currently enables fast, low-cost payments to two dozen countries. The
solution has the potential to handle 50% of Banco Santander’s international payment
transactions.
A Blockchain Payments Startup Raised $10.5M in 3 Years
A UK-based fintech startup Mercuryo has developed a blockchain payment processing
solution that enables businesses and individuals to easily send and receive cross-border
payments. The solution supports 50+ cryptocurrencies and fiat currencies, offers
fast processing of international payments, and facilitates traceability of cross-border
payment transactions. It provides automated AML/KYC compliance checks and offers
prebuilt APIs to integrate with the corporate clients’ systems.
Mercuryo raised $10.5 million in funding from 2018 to 2021. Today, the company
serves 200+ businesses in 135 countries and partners with a range of global crypto
players, including Binance, Bitfinex, Trezor, and Trust Wallet, to deliver additional value
with their solution.
Get High-ROI Blockchain for Cross-Border Payments
Entrust the development of your blockchain software to ScienceSoft. Having proven
expertise in blockchain implementation, we know how to promptly create an effective
solution that will help you gain a competitive edge.
Turn to Professionals
ScienceSoft’s Tech Stack for Blockchain Implementation
Back-end programming languages
Front-end programming languages
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Smart contract programming languages
Blockchain frameworks and networks
Blockchain cloud services
DevOps
DevOps
Use: to streamline testing, deployment, and updates of a blockchain solution
(Containerization); to automate blockchain-based software deployment and configuration
(IT automation).
Containerization
IT automation
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Back-end programming languages
Click on the technology to learn about our capabilities in it.
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Front-end programming languages
Languages
JavaScript frameworks
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Smart contract programming languages
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Blockchain frameworks and networks
Use: to speed up blockchain development while ensuring high application quality.
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Blockchain cloud services
Use: to easily build, host, and manage the blockchain environment.
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DevOps
Use: to streamline testing, deployment, and updates of a blockchain solution
(Containerization); to automate blockchain-based software deployment and configuration
(IT automation).
Containerization
IT automation
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The Challenges of Blockchain for Cross-Border Payments
Many business owners and executives still have doubts regarding blockchain’s ability to
address certain operational and regulatory aspects of cross-border payments. But having
years of expertise in blockchain development, we know how to solve the potential
challenges safely and cost-effectively.
Challenge #1: Compliance with anti-money laundering regulations
Blockchain needs to provide compliance with global and region-specific AML/CFT
regulations, including KYC, CDD, and FATF requirements, to prevent illicit payments and
money laundering.
SOLUTION
Challenge #2: High crypto volatility
Some blockchain solutions rely on the “fiat-crypto-fiat” model of cross-border payments.
Under this model, blockchain employs cryptocurrencies as the bridge between the payer’s
fiat currency and the payee’s fiat currency. However, continuous – and considerable –
fluctuations in cryptocurrency prices pose the risk of losing the crypto funds value during
currency conversion and transaction processing. The blockchain solution needs to address
this risk.
SOLUTION
ScienceSoft’s expert tip: Coding the rules for the automated currency conversions
in smart contracts helps significantly speed up cross-border payment processing.
Challenge #3: Continuous data upload from off-chain sources
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Blockchain for payment needs to instantly access the data provided in payment-related
documents, as well as up-to-date currency exchange rates for crypto and fiat. These data
are essential for accurate processing and recording of cross-border payment transactions.
Thus, the solution has to be seamlessly integrated with the relevant external data sources.
SOLUTION
Costs of Blockchain-Based Cross-Border Payment Software
Major factors that affect the cost and duration of the development are:
The solution’s functional complexity.
The number and complexity of smart contracts needed to introduce cross-border
payment automation.
Performance, scalability, security, and cross-chain interoperability requirements
for the solution.
(for blockchain solutions built from scratch) Blockchain network type – private,
consortium, or hybrid – and a chosen consensus algorithm.
(for platform-based blockchain solutions) The selected blockchain platform.
Role-specific requirements to the UX and UI of web and mobile payment
applications.
The need to develop APIs to integrate the blockchain solution with financial data
marketplaces, an accounting system, ecommerce platforms, and other relevant
software.
The required development scope (PoC, MVP, a fully-featured solution).
Based on ScienceSoft’s experience, blockchain cross-border payment projects may require
the following investments:
$150,000–$250,000
A cross-border payment app that relies on an existing blockchain network to
process payments.
$500,000–$1,500,000
Afull-scale custom blockchain solution with a dedicated blockchain network for
cross-border payments.
Get to Know the Exact Cost of Your Blockchain Solution
ScienceSoft’s team is ready to calculate the project cost for your specific case.
Get a Custom Quote
Blockchain Consulting and Development by ScienceSoft
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In end-to-end software development for 34 years, ScienceSoft helps deliver reliable
blockchain solutions for cross-border payments.
Consulting on blockchain for cross-border payments
We introduce a clear concept of yourblockchain software and advise on the solution’s
security and compliance. You also get a detailed roadmap for blockchain development and
expert advice on the project cost optimization opportunities.
I need this!
Development of blockchain for cross-border payments
We design and build blockchain-based software with your strategic business goals in
mind. Plus, we develop APIs to expand the solution’s integration capabilities. You get a
state-of-the-art, highly secure blockchain solution promptly and at the optimal cost.
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About ScienceSoft
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ScienceSoft is a global IT consulting and software development
company headquartered in McKinney, Texas. We deliver blockchain
solutions for secure, prompt, and cost-effective processing of cross-
border payments. In our blockchain projects, we rely on robust quality
management and data security management systems backed up by ISO
9001 and ISO 27001 certifications.
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