Cryptocurrencies are quickly finding favor as digital assets with diverse applications. B2B companies, financial institutions (FIs) and FinTechs alike are eyeing their potential as a rising number of companies tap virtual currencies.
More and more companies are seeking solutions that can help them make easy, swift payments no matter the market. Using digital assets can simplify certain facets of these transactions, such as enabling companies to consolidate and track their payments in one place.
In fact, 50% of multinational firms use digital currency for cross-border payments or plan to do so, according to The Cryptocurrency Payments Opportunity, a PYMNTS and i2c Inc. collaboration.
Supporting smooth, speedy cryptocurrency payments can still be a challenge, however. This is especially true for cross-border payments, which are notoriously complex — even using fiat currencies. Changing regulations, the availability of key digital infrastructure and trust all can hamper crypto’s adoption.
As a result, international firms that wish to make cross-border B2B payments via cryptocurrencies could face significant hurdles, meaning banks must carefully examine trends surrounding virtual currencies worldwide. Eliminating friction points is key to the growth and adoption of cryptocurrencies on a global scale.
B2B companies, FIs and FinTechs are all taking rapid steps to move toward making virtual currencies part of the mainstream payments ecosystem. This is creating greater competition between legacy FIs and nimbler FinTechs looking to play a dominant role within the space, especially as cryptocurrencies’ potential applications capture more attention.
In the cross-border B2B payments space, for instance, utilizing cryptocurrencies and the blockchain technologies that support them could give companies a competitive edge over the next few years as business becomes more global.
Bringing More Transparency to International Transactions
Because it’s inherently network-based, McCarthy said, crypto can move more easily across borders, because it doesn’t need to change hands between “a myriad of correspondent banks” to do so.
As a result, crypto also “removes a lot of the opaqueness that comes with moving money via traditional methods, where you’re maybe less sure of when exactly it’s going to get there or what it’s going to cost,” he explained. “Crypto changes that in big ways, and will grow significantly as more people become comfortable with it as a means of money transmission and recognize its benefits.”
As interest in crypto rises worldwide, companies are paying more attention to the role that the supporting technologies underlying it, such as blockchain, can play in meeting their payment needs.