Blockchain technology is still relatively young, and people continue to find more and more practical uses for it. Cryptocurrencies can prove to be a great B2B payment solution. Blockchain technology is highly secure, which provides a much lower risk for fraud and chargeback than with credit cards and other e-payment methods. Cryptocurrency as a payment method no longer has to be limited to withdrawing winnings from free bitcoin slots and various fringe online activities.
Nowadays, they also provide a great solution for cross-border payments and currency exchange. Many of the people who are most vulnerable from a financial perspective are so because they don’t have consistent access to a bank account. Many people in less developed countries are underbanked, which means they don’t have access to a reliable financial institution with which to store and invest their money. Cryptocurrencies provide them with a way to transfer funds securely to people who live in countries with different currencies. For example, the citizens of the U.S. can send money to people in other countries without having to worry about the fees associated with banks.
With crypto payments, the threshold for opening up a business in the 2020s can get lower than ever. With near-instant B2B transactions, international finance may become accessible to small businesses at earlier stages of development, opening them up to new customers around the world. Keep reading this article to learn more about how cryptocurrencies can revolutionize the landscape of B2B payments.
Smart Contracts are the Way of the Future
Smart contracts can become a gamechanger when it comes to business-to-business transactions because they can be adopted for a wide variety of potential payments. Businesses can utilize smart contracts to ensure that the terms of an agreement are met. This technology can reduce the need for people in certain functions, whether that be customer service or sales. The use of smart contracts in blockchain can facilitate business-to-business transactions without a middleman.
They should also be able to eliminate many problems with public records. Evidence of funds transfer, land ownership, and other public records could be stored on the blockchain instead of relying on physical copies and other unreliable methods for storing data. Some people would rather not have every transaction replaced by programmable blockchain transactions, but this technology has the ability to improve public records. Subsequently, this allows for further simplification of B2B payments and less reliance on financial institutions.
Lower Transactions Costs
Smart contracts can cut down on transaction costs. Companies need to determine what percentage of the overall cost for a good or service is the cost of a standard transaction. For example, if a company wants to sell its product overseas, processing the transaction through standard shopping portals may raise the overall cost of the product. A smart contract can facilitate this exchange with the funds being held in escrow until the company can verify the product has been shipped. This would reduce the processing cost to the company, which may make it cheaper to do business with them.
These are just a few ways that smart contracts can be used to bring about new innovations that will change the enterprise. Blockchain and smart contracts can create new ways of doing business that will put power into the hands of the business owner.
International Transfers Made Easier and More Accessible
Cryptocurrencies can facilitate B2B payments across countries, which is especially important for under-banked third world nations. One example is the Philippines, whose central bank has approved 5 blockchain startups to process domestic and international remittances.
When considering the various ways in which cryptocurrencies can be used in the developing world, a general principle emerges: they are most effective when they serve as an enabler for positive actions and behaviors that would have been harder or impossible without the cryptocurrency in question.
Which Payment Method is Best?
Some cryptocurrencies, like Dash and Litecoin, have enabled micro and even nano-transactions, which makes them perfect for use in the micro-lending space. Other currencies, like Bitcoin Cash, can be used for remittance payments, which has a particularly strong appeal to migrants who want to securely send money back to their families.
However, certain cryptocurrencies are better suited to handling remittances than others. Ripple, and to some extent Stellar, are known for their fast transaction speeds, which makes them ideal for handling payments between countries. Also, Ripple has been branching out into various long term business partnerships, which allows it to better enter into relationships with large financial institutions.
The overall point is to make sure that cryptocurrency projects being implemented in the developing world focus as much on functionality as they do on financial sustainability. Because of their inherent biases and volatility, cryptocurrencies are not a panacea for economic development. However, they can definitely be used in innovative ways to make life easier for the people most in need of a helping hand.
The Bottom Line
The examples provided in this article prove that cryptocurrencies may become a very powerful tool in the hands of many businesses in the near future. Without having to rely on a third party as the middleman, the benefits and security of trading with the use of cryptocurrencies such as Ethereum or Bitcoin can soon outnumber their disadvantages. These transactions have the potential to facilitate years of growth, especially in underdeveloped regions without much access to reliable banking. Our prediction is that with time, using cryptocurrencies for secure B2B payments will become the new normal, with businesses and customers coming together to reap the benefits of faster and more reliable transactions that make use of digital currencies.