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The world in which we operate is changing rapidly and companies must adapt quickly. Following the global pandemic, many companies were forced to turn domestically as supply chains were affected and international trade became more challenging. This is further exacerbated by geopolitical tensions, which have impacted global supply chains. However, many supply chains have begun to open up and become stronger as new technology unlocks boundaries, both physical and metaphorical.
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Despite this, a consistent problem for finance teams is that of cross-border payments. Transferring money safely and quickly to different parts of the world without incurring excessive fees is a challenge that is well documented from a consumer perspective. The problems become even greater when the size and complexity of the transaction for companies increases.
However, there is a solution here. Digital currencies, powered by blockchain technology, are poised to revolutionize B2B interactions on a global scale and have the ability to eliminate those cross-border payment headaches for businesses. They will offer the possibility to pay 24/7, 365 days, all over the world, in a secure way and at a low cost.
In early October, online payments giant PayPal used SAP’s new Digital Currency Hub to pay an invoice to Ernst & Young using its stablecoin PayPal USD (PYUSD). Examples like these show the increasing adoption of digital currencies and blockchain technology by global companies, with cross-border payments providing a tangible use case.
The challenges for companies
Legacy infrastructure that supports cross-border transactions can be cumbersome, expensive and fraught with compliance challenges. Businesses of all sizes are feeling these pressures acutely, and digital currencies can solve many of the problems these businesses face. When I speak to our customers, it becomes clear how digital currency payments can help them. The three major challenges most often referred to are:
Speed and accessibility: Traditional payments can only be made during banking hours and customers must take cut-off times into account. In addition, they take several days to establish, especially if they are complex in nature or of high value. Digital currency transactions, on the other hand, can be executed almost instantly. This speed is especially important for large corporations that need to move large amounts of money abroad in a weekend, for example to complete a merger and acquisition transaction.
Cost efficiency: Companies are often confronted with high transaction costs and unfavorable exchange rates when trading internationally. These costs can pile up quickly, impacting profitability. Digital currencies can significantly reduce transaction costs because they eliminate the need for multiple intermediaries.
Regulatory Compliance: Globally, we are seeing increasingly complex regulatory environments. Navigating multiple different geographies exacerbates this problem. Digital currencies can increase transparency and traceability, making it easier for companies to comply with local and international regulations. Blockchain’s immutable ledger provides a reliable audit trail, facilitating compliance and reducing the risk of fraud.
Efficiency and savings for businesses
If the three challenges mentioned above are solved through blockchain technology and digital currencies, enterprises can significantly streamline their operations, with clear cost savings. But the benefits also go much wider:
Improved cash flow management: Faster transactions lead to better cash flow management. Enterprises can receive payments in real time, increasing liquidity and enabling more strategic investments and operational flexibility.
Ability to develop new business models: With significantly lower costs, especially for smaller payments, companies can build new consumption or subscription-based business models, billing more frequently with lower payment amounts, allowing them to differentiate their offerings.
Reduced fraud risk: Fraud and cybercrime pose significant risks in cross-border transactions. The decentralized nature of Blockchain ensures that no single entity has control over the entire system. Every transaction is recorded in a ledger and cannot be reversed, so fraudulent chargebacks are impossible.
Looking to the future: how do we get there?
The points I made above just give a snapshot of why I think we will see more and more B2B business payments happening on the blockchain with stablecoins. The combined savings, operational efficiencies and safety benefits are too great to ignore. However, there is still a long way to go before blockchain-based stablecoin payments become the norm for enterprises.
To realize the full potential of blockchain in cross-border B2B transactions, companies must take deliberate steps to integrate this technology into their operations. The first step toward this future is for leaders to educate their teams about the benefits and functionalities of blockchain technology and digital currencies, especially stablecoins. This insight will enable smoother transitions and greater internal buy-in.
Before full implementation, companies should conduct pilot projects to test stablecoin payments in controlled environments. This approach allows organizations to identify challenges and measure the effectiveness of the technology for their specific use cases. Working with cryptocurrency providers and exchanges, as well as enterprise application providers, can help companies deal with any integration issues and provide valuable expertise and resources.
I believe that the future of cross-border B2B business transactions is undeniably intertwined with blockchain technology. As we move forward, the call to action is clear: enterprises should consider evolving their financial strategies and harnessing the power of the blockchain and stablecoins for payments. The benefits are significant.
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Carlo Bru
Carlo Bru is the CEO of Taulia. In this role, Cedric drives global growth, increases market penetration and identifies new business opportunities. Since joining Taulia in 2013, Cedric, previously the company’s Chief Sales Officer, has helped Taulia triple revenue two years in a row, build strategic international partnerships and help the company achieve 100 percent customer retention . Before Taulia, Cedric was Global Head of Sales, Marketing and Business Development at Visa’s Syncada. Cedric has more than twenty years of experience in the financial services and software industries, including positions at Visa and Hewlett-Packard.