2017: The Year of Instant B2B Cross-Border Payments Becomes Reality
The concept of instant cross-border payments, especially in the B2B space, is one of the most coveted milestones in the financial industry. For counterparties who wish to settle transactions in real-time, the exchanging of comprehensive payments data is critical to ensure the completion of the transaction. Achieving real-time payments on a global scale has, however, remained a dream. This is due to the combination of technology deficits, regulatory burdens and process inertia.
Yet, as we kick off 2017, we are on the precipice of the most exciting time in the history of the global payments industry. We are leading the way to eliminate the long-standing barriers to the realization of real-time, cross-border payments. Which is way why I’m declaring 2017 the Year of Cross-Border, Instant Payments!
Here are a few of the biggest trends that are driving the industry toward this reality:
- Proven use cases for blockchain technology in payments:
If 2016 was the year of blockchain concepts, 2017 is the year of adoption. It’s time for use cases to be proven and actually come to market to benefit stakeholders. Excessive amounts of VC money has been thrown into companies with unproven blockchain models; with that investors, stakeholders and the industry should now expect to see meaningful results. It’s time to challenge if these investments actually improve the ecosystem and generate real value to banks, corporates and market participants globally. This is the year we see if these investments were prudent.
- Payments on a global scale:
Instant payments have driven innovation in developed markets and domestic markets. However, to date, sending payments cross-border has relied on the same process, procedures and technologies, and economic models that have facilitated payments since the 1970s. This is due to the existing systems and the fact that, in a payments ecosystem, there needs to be certain centralized criteria, especially in cross-border when it comes to regional, legal and regulatory compliance. The rise of technologies such as blockchain are shortening the steps required to send payments — a solution to deliver these payments faster around the world.Using the foundation of blockchain, PayCommerce’s Federated LedgerTM is a hybrid, integrating both distributed and centralized ledgers. This model enables non-repudiated (the process, not the technology makes it faster) payments across networks, combining the foundation of blockchain technology with PayCommerce’s business model which includes it’s robust, secure and transparent messaging platform. The federation of compliance and business rules are combined with the consortium model. By leveraging the blockchain foundation, PayCommerce ensures it is compliant, secure and accommodates business rules in a heterogeneous network environment. As a result, these innovations are significantly driving down the costs and settlement time of the transactions for all industry stakeholders.
- Real-time clearing and settlement:
To achieve instant cross-border payments on a mass scale, the industry must adopt real-time clearing using a consortium banking model. Real-time clearing and settlement is the last milestone in bringing instant payments to cross-border transactions, removing unnecessary costs and risks from the outdated existing system. Crossing this threshold inside of an open consortium network provides global banks with the ability to send payments across borders in an instant– regardless of the bank’s country, size or technology. 2017 is the year we will see real-time initiatives move from concept to proven concept, driving faster payments all around the world.
Instant payments on a global scale will finally democratize the payments industry, driving remittances to a greater portion of the population than ever before. The result is a B2B payment ecosystem of global payments. We envision a world where this innovation can happen on top of that. For example, maybe you’ll be able to send a payment from an app on your smartwatch. In this day and age of social media and Twitter where messages are real-time, we see payments and settlement happening on the same schedule and with it the velocity of global trade can happen in real-time as well.