Guest blog post from Howard Davidson, CMO at AlmondFinTech
In the past couple of years, there has been an enormous amount of content written and studies conducted on the individual and societal importance of reducing the costs of cross border payments. The benefits of an agreed to amount arriving at an agreed to destination without being reduced by a plethora of middlemen and chokepoints is essential to an increasingly global economy.
The increased migration of populations in the pandemic world is a big reason for the emergence of more cross border payments and the popularity of crypto and digital wallets as an alternative currency. Blockchain payments can ensure that financial services reach people with limited to nonexistent banking services, no matter what form of currency you are using.
Today, with all these practical benefits, it is the safety of cross border payments as a concern that has risen to the top of the pyramid.
Banks are increasingly moving to digital solutions, and regardless of the future of crypto, the one technological innovation that is here to stay and will evolve as it is more and more adopted is Blockchain. The table stakes in cross border payments is speed, costs (40- 80% reduction in transaction processing costs) and efficiency, but just as important is safety, and this is where Blockchain technology really delivers.
How Blockchain increases safety
Blockchain technology increases the safety of cross border payments by increasing transparency and reducing the risk of fraud. It provides greater security of sensitive data than epayment systems such as PayPal or MoneyGram.
Blockchains are decentralized networks, independent of middleman to process transactions, which reduces the risk of fraud or manipulation. Transactions are publicly visible, making it easier to track cross border payments, and once a transaction is added to the blockchain, it cannot be altered.
There is no single point of failure across the blockchain’s digital ledger. Altering the data – which can indicate fraud – stored on the blockchain requires permission from up to 51% of the participants at the same time. Also, it requires an enormous computing power to compromise the network, thereby reducing the ability of interlopers from compromising the transaction.
Transactions can be tracked and verified in a transparent and secure manner, reducing the risk of fraud and other financial crimes. Its cryptographic algorithms secure transactions and prevent unauthorized access or tampering. Only authorized parties can access and process transactions. And payments can be tracked, providing payee and payer a view of where their money is in the pipeline.
Blockchain is a secure and transparent “pipe” through which money can flow safely across borders. It eliminates potentially troublesome middlemen and costly chokepoints. Essentially, there are fewer fingers in the pie. Its digital ledger is far more tamper proof than existing processes, with alerts that can freeze a transaction should an unidentified, keyless intrusion occur. With its reduced costs, speed of transactions, and increased safety protocols, blockchain is the payment technology of the future.
Howard Davidson is the CMO at AlmondFinTech.
AlmondFinTech is a blockchain-based funds transfer network connecting financial institutions globally. Almond’s infrastructure is built for speed, security, and accessibility, enabling users worldwide to send money across borders using their existing financial institutions. Additionally, Almond uses a combination of psychometric and financial data to provide fast, low-risk, ethical loans to communities with unconventional or limited credit histories.