Blockchain Disruption in Global Payments

The target of global industry valuation crossing $2 Trillion is to be achieved 2 years sooner than projected and a $3 Trillion threshold is inside the five-year horizon. (source: McKinsey) The non-open-source alternative to blockchain, essentially a patented blockchain, known as Distributed Ledger Technology fundamentally changes the competitive dynamics. 

Outburst in developments enabling globalization has created a steep demand for inter-operability, specifically in data, goods and money. While the internet allows for universal platform of data sharing, and shipping services have been evolving since import-export industries, the flow of money lacks the infrastructure 21st century needs. 

Global crossborder payments require multiple entities to involve in the transactions, leading to upwards of 10% in transaction fees. This inevitably happens since each entity involved maintains secure records and generates reports for compliance.

For an e-commerce cross-border transaction, routing, processing and approval takes place. Credit card information is captured by the payment gateway, which subsequently forwards the transaction information to the bank on the receiving end. Approval request to debiting bank is generated subsequently. Based on funds available in debit account, transaction value and currency-matching, the bank approves or denies the request. 

The footprint of currency: Sender’s Bank > Local Clearing Network > Correspondent Bank > Payment Gateway > Correspondent Bank > Local Clearing Network > Receiver’s Bank

Blockchain infrastructure eliminates intermediaries by creating common link between banks. The immutable nature of blockchain allows banks to rely on a single, shared database, which keeps the record of bank-to-bank transactions.


Institutions that transact capitals, require a large pool of capital locked between the institutions. This money sits in the Nostro and Vostro accounts which can not be utilized for any other purpose but to enforce the reliability of the institution. Holding such capital gets charged to the clients in terms of fees. With the services like Ripple cryptocurrency’s xLiquid, such capital can be unlocked, potentially reducing the fees and utilizing the locked capital.

Multiple start-ups have emerged solving specific frictions in the payments industry, forcing the incumbents to adapt or be obsolete. The following are well-established projects. 

Ripple visions around internet of value. Fundamentally, anything of value should be trade-able. To ease the frictions in inter-operability of financial institutes globally, ripple features xCurrent for efficient cross-border payments, xRapid for liquidity, xVia for end to end customer transactions.

Based on Ethereum blockchain, OmiseGo is decentralized and provides a decentralized exchange platform. OmiseGo aims to enable a platform to transact value of any type starting with end to end payment solution between merchants and customers,. OmiseGo provides open source Software Development Kits for ventures to build and integrate OmiseGo based payment gateways.

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