A new report from payment giant Ripple examines how blockchain technology could improve the efficiency of this lucrative sector.
In a report titled Big Opportunity in Small Business Payments, Ripple discusses the ways small and medium-sized businesses (SMBs) could improve their cross-border payment systems through the use of blockchain technology.
Ripple’s research highlights the lack of infrastructure in emerging markets for SMBs to conduct cross-border B2B business-to-business payments, despite a market of $ 10-15 trillion.
“Despite recent growth, the B2B cross-border payments market for SMEs is being held back by the lack of traditional financial services. The fees for international payments are extremely high and in some regions cross-border services are not even readily available. “
Ripple’s report adds that involving intermediaries in current global payments practices complicates the process.
“Still, SMEs are increasingly relying on cross-border payments to grow, both to attract new customers and to give suppliers and outsourced workers more room for error. Any delay between paying these suppliers and the employees really affects the ability of SMBs to keep their business going, to grow and to scale.
SMEs themselves do not believe that current methods are suitable. 71% of SMEs state that “cross-border payments are problematic”. According to Ripple, business-to-business payments take an average of 2-5 days to process, cost $ 30-100 or more, and have an international payment rate error of 4% -6%.
This is where blockchain technology could intervene and improve the cross-border payment structures of SMEs, says Ripple.
“By eliminating the intermediaries in the correspondent banking system, blockchain-based payments increase speed and reduce costs for providers and SMEs.”
You can read the full report here.
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Selected image: Shutterstock / Tithi Luadthong / Dario Lo Presti