The legacy financial sector is surprisingly inefficient. Even in wealthy countries, payments can be unreliable, slow and costly. Take the US consumer financial system. ACH (automatic clearing house) payments can take up to 3 business days to process and often include fees. Limits are often set on how often and how much can be transferred every month.
It’s not just bank-to-bank payments that are in need of modernization. International remittances – sending money to friends and family in different countries – is fraught with hidden costs and slow transfer times. Debit and credit card networks take ever-increasing fees out of hard working small and medium sized business revenues. And widespread lack of financial literacy and inclusion remains as an indictment of global monetary policy.
Thankfully, a new era of technological innovation is on the brink of bringing widespread change for both the global economy and payments.
Fundamental Differences
The public networks in blockchain technology are a good example of a frictionless alternative to today’s legacy systems. Open, transparent, fair and equal – blockchain technology enables anyone with an internet connection to submit and secure their transactions onto a public ledger.
Traditional banking remains stubbornly opaque compared to blockchain’s open source values. Our financial institutions take advantage of closed systems, including committing fraud, to the tune of billions of dollars per year. Ironically, Bitcoin is often scapegoated as the leading facilitator of illicit transactions, but the data prove otherwise.
Technological Advantages
The inherent advantages and potential that blockchain technology has to transform the world of payments is quickly realized. The digital-native nature of blockchain architecture means that it has been purpose built, from the ground up, to securely transfer information.
As a result, sending and receiving value – whether representing a purely digital currency or fiat-based denomination – is incredibly efficient. Transacting on a blockchain network often takes as little as a few minutes (or even seconds), with fees much lower than traditional finance. Consequently, there has been an explosion in startups racing to take advantage of this quantum leap in technology and efficiency for payments.
Next-level Fintech
Companies like MobiePay are geared towards transforming the way we interact by substantially lowering the barrier to entry for consumers and businesses. Advantages over traditional fintech applications include; near-instant transfer and exchange of fiat and digital currencies, fees at a fraction of the global average cost for money transfers, low cost point of sale integration and fees for retailers.
With less constraints than existing financial networks, the future of these fintech products seems limitless. A world where everyone has access to cheap global financial services – seamlessly sending any denomination of value to anyone else through an app. These innovative products will help build the payment apps of the future.
Written by Adam Eaton
