When the world first received an introduction to the idea of blockchain, it was to support the cryptocurrency Bitcoin. As we have gotten to know what it can do, companies have found a lot of potential n this technology.
Blockchain offers the capability of underpinning a wide variety of applications. That includes the ability to provide international B2B payments.
It can also verify a person’s identity, pay taxes, and manage online advertisements – and that’s just the tip of the iceberg of its capabilities.
According to Deltec Bank, what is a big proponent of Blockchain technologies, “Many of these applications are still under development, but there is a strong push to utilize B2B payments today. From SMBs to large enterprises, there are several benefits available to consider.”
Blockchain for B2B Payments and More
The earliest adopters of B2B payments using blockchain were the financial and banking industries. Institutions are currently testing this technology to determine the extent of its ability to provide options for payments.
Some companies are already using blockchain technology for B2B payments and consumer transactions because of its usefulness. That includes an option for cross-border payments.
Much of this work so far has come from software developers, third-party providers, and consortia.
As the options for B2B payments increase, financial institutions are also exploring how blockchain helps them to meet their regulatory needs. It is a way to streamline workflows, improve administrative chains, and reduce fraud.
Some of Europe’s largest companies in this sector are collaborating on a pilot program using blockchain tech to exchange data by using common standards.
What Are the Benefits of Blockchain for B2B Payments?
Blockchain offers three primary advantages worth considering when you look at it through the lens of B2B payments.
- It can result in faster payments.
The transparency of blockchain makes it a faster process to make payments because there aren’t third-party verification steps that must take place. Its transaction ledger for public addresses is open to view, which means businesses have an unprecedented layer of accountability added to their activities.
- It lowers the costs of a transaction.
Blockchain eliminates the need for costly currency conversions because each party can access the token or crypto from the end of the transaction. A bank could send 3 Bitcoin from the U.S. dollar overseas to France where the payment could then come out in euros. It is also possible to leave the transaction as-is to trade the cryptocurrency instead.
- It reduces the need for cash reserves.
Because blockchain encourages digital B2B payments, the banking industry may in the future need to hold lower cash reserves. Businesses can also minimize their holdings because there isn’t a reduction in liquidity.
Transactions over the blockchain are going to continue growing in size and complexity. Because it offers these unique benefits, more businesses will look at this option for B2B payments since this technology will facilitate transactions.
As we learn more about what blockchain provides, it is clear to see that it can do more than facilitate Bitcoin interactions. This technology could change the way we do business at all levels.
Disclaimer: The author of this text, Robin Trehan, has an undergraduate degree in Economics, Masters in international business and finance and an MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management