As time progresses and more smart devices get into the hands of consumers, there will inevitably be more purchases made between countries. With eCommerce in full swing, many retailers are looking to restructure many facets of their operations. From installing more IoT sensors in physical locations to strategic partnerships with chatbot messaging apps and more, retailers are revamping the way in which customer service is provided to consumers.
It’s through these smart devices that cross-border payments are more easily enabled and available for consumers’ convenience. This is great news for retailers, as it allows them to reach new audiences in new markets all over the world.
Naturally, with ease of market entry into various parts of the world economy also comes security concerns. Blockchain technology is often used as the go-to source to enable faster and safer transactions, especially for smaller players in the retail market. As we reported earlier this year, “Blockchain-powered payment rail technology is one such solution helping SMBs stay competitive in a rapidly changing global marketplace by helping smaller players get around fees and bureaucracies imposed by banks.”
Given the encrypted nature of blockchain technology and its traceability, it may be safe to say that it’s one of the best ways to help safeguard all transactions made across country borders, because it’s one of the few known real-time security operations that ensures security for both parties alongside transparency.
One of the many challenges that typically arises when it comes to cross-border eCommerce payments is potential card-not-present fraud occurrences. This results in a loss of revenue for retailers and a potential decline in customer loyalty. With the advent and implementation of utilizing blockchain technology, funds can be verified in real-time to help avoid this issue.
Cross-border transactions are in great abundance and will likely only continue to grow, as Gartner predicts nearly 21 billion connected devices by 2021. In PYMNTS’ X-Border Payments Optimization Index that recently tracked 192 merchants from around the world, we found the goods and services trade between the U.S. and China alone was approximately $660 billion. Given the use of blockchain technology, the amount of cross-border transactions made between countries like these are likely to increase exponentially.
We spoke with enterprise-class global payments network company PayCommerce’s founder and chairman Abdul Naushad, discussing how blockchain technology has impacted the changing retail payments space and what the future holds for it. Here’s an excerpt from our conversation:
PYMNTS: How does blockchain technology impact and safeguard the instant cross-border payments space?
AN: Based on blockchain principles, a proven banking consortium network [ensures] safer, instant cross-border payments in real-time. In a distributed ledger model, every participant can host a node, and every transaction in the network is kept on every node. But you cannot have the distributed ledger without a centralized and more controlled model. Federal ledgers operate on a closed-loop system where a central master record of transactions are kept by a secure party and participants in the transaction can keep a copy of the transaction. The banking consortium acts as a system of checks and balances between two different parties transacting between each other.
PYMNTS: Are there any regulations in place currently that are making instant cross-border payments more difficult?
AN: One space where we are seeing barriers to cross-border payments is in the market entry process into other countries, such as Japan. More needs to be done to make it easier to partner with mid-tier or second-tier banks in this region.
PYMNTS: What do you see impacting this space in 2017 and beyond?
AN: There is a lot of transformation happening in regulatory technology — especially in AI (artificial intelligence) — by leveraging blockchain to register and store compliance information and making that data accessible to certain parties. More banks will be implementing innovative regulatory technology in the future, and it will be interesting to see what happens in the next three to five years.