Businesses across the world have a payments problem.
Across the world, economic growth is built on one thing: mobility. Economies stall and businesses stagnate without fluid and unobstructed cross-border movement of goods, services, capital and people.
This is such a basic economic principle that one might expect that any unnecessary obstacles to free economic movement would have disappeared by now. But facts indicate that this is not the case. Among the biggest of all these obstacles? The archaic, cash cow-oriented, bank-based system for international money transfers and business remittances.
A SWIFT bank transfer from London to New York may take only a few days, but the same type of transfer between rural localities in India and Indonesia, for example, could take over a week. Sometimes, such transfers are not even accessible in emerging economies.
Adding insult to injury, such cross-border bank services come with steep fees and transaction costs that are often prohibitive for small businesses or individuals. Case in point: International organizations such as the World Bank monitor the charges incurred for personal transfers, which go through exactly the same payment channels as B2B transfers between enterprises. According to the World Bank, in 2022 the average price of an international remittance was about 6% of the sum transferred. In fact, the fees charged by the incumbents when the transfer involves a country within the developing world are often much higher.
McKinsey forecasts that annual cross-border payments are projected to reach $2.5 trillion in 2025. If one takes the World Bank’s average rate of 6% and applies it to McKinsey’s projections, the fees are a daunting $150 billion. This tells everything one needs to know about just how much the traditional cross-border payments system drains from the lifeblood of businesses across the world that need it the most.
Blockchain-based payment solution is the answer
When cryptocurrencies first emerged a little over a decade ago, their core premise was that they would disrupt global financial systems by introducing a more cost-effective and faster payment channel. In some cases, the jury is still out on whether they can have such a positive effect.
Granted that, cryptocurrencies are indeed a revolution in the sense that they allow rapid, cheaper and an equally secure transfer between two parties located anywhere in the world, without the need for utilizing the traditional payment system. But the volatility of cryptocurrencies and the technicalities involved for one to use them, have made them an overly risky payment mechanism for the majority of SMEs and individuals.
In the past couple of years, the development of stablecoins has created an opportunity to revolutionize international transfers. This is because their prices are pegged to traditional fiat currencies but at the same time, they are transferred using the same fast and secure blockchain infrastructure as traditional cryptocurrencies (Bitcoin, Ether, etc).
However, using cryptocurrencies can be confusing to most merchants. All that has been missing, to allow businesses that are not crypto natives to get a fair, safe and fast money-transfer experience, is a trusted infrastructure that allows them to benefit from the advantages that stablecoins offer. Now, thanks to the innovative crypto-native firm OnPay, a Singapore-based corporation, this gap is filled.
One platform, over 80 countries, more than 75 currencies and secure same-day processing
Leveraging several rounds of funding from major and experienced investors, including IDG, Sina and Circle, OnPay has designed and built a blockchain-integrated cross-border payment network that currently serves over 80 countries and handles more than 75 fiat currencies.
The OnPay network supplements banking and traditional payment intermediaries. This makes transfers exponentially faster and cheaper than traditional international bank remittances. Unlike traditional cross-border payments that close over the weekend, OnPay operates on a 24/7 basis, so that users can send and receive payments in their local currency, or in a range of stablecoins in a matter of minutes, including USD coin, Tether and CNH coin.
All transactions are conducted via the user’s digital device, a feature that opens international commerce to businesses that are unbanked, or those that have limited access to banks offering international transfer services. Because the network operates on the blockchain and without third-party involvement, users can be confident their transactions are private, encrypted and safe while circumventing the uncertainties, costs and unfair inefficiencies of existing payment systems
Since its launch in 2021, thousands of SMEs have switched to the service provided by OnPay to conduct ecommerce transactions, deposit wage remittances and settle invoices with their overseas partners.
Now, OnPay is continuing to improve its digital service capabilities such as product development and technology application with cross-border payment as the core. SMEs can learn more about how OnPay can slash their transaction costs and open up new commercial opportunities, both domestically and abroad, by visiting the OnPay site for more information.