How to build cross border payments app?
How to build cross border payments app?
- Striga
- 4 min read
Table of Contents
SWIFT has been the industry standard for global money transfer since its formation in 1973. It has offered a secure, standardized environment for banks and financial institutions around the world to send and receive global transaction details. But in recent times it has come under increasing criticism for its inefficiencies, high costs, and slow transaction times. It’s hard to believe we live in 2023, and it still takes days to receive a simple bank transfer.
Cryptocurrencies, for a time now, have been considered the best alternative to replace SWIFT in regard to global money transfers. It provides peer-to-peer transactions in decentralized blockchain technology and can offer an almost instantaneous, much more affordable, and more secure international money transfer.
Crypto remittance payment APIs
Faster cross-border transactions
A transaction through SWIFT goes through different intermediaries and complex compliance, which can take up to days to process. Blockchain transactions are processed in a few minutes or even seconds, regardless of geographical location or the time of the transaction presenting a much faster alternative to SWIFT.
Inexpensive cross-border transactions
High processing fees have always been a significant drawback of SWIFT transactions. There is a minimum charge involved which makes it quite expensive for smaller amounts. Cryptocurrency transactions on the blockchain network on the other hand are significantly cheaper making them a compelling alternative to SWIFT, especially for cross-border transactions like remittance.
Borderless cross-border transactions
SWIFT relies on each of the country’s banking infrastructure and intermediaries to complete a transaction. Cryptocurrencies operate in a borderless network without any reliance on banking infrastructure or intermediaries. This particularly is an advantage for doing transactions in remote regions without any banking infrastructure.
Stablecoins and CBDCs: the solution?
Stablecoins and Central Bank Digital Currencies (CBDCs) might be the solution for a smooth transition from SWIFT to cryptocurrencies for cross-border transactions. Stablecoins are cryptocurrencies that are tied to stable assets, like fiat currencies. CBDCs are digital versions of a country’s currency and are regulated by its central bank. Both of these digital assets offer the advantages of cryptocurrencies while being stable under a regulatory framework. This could potentially be the bridge to shifting to an alternative from traditional SWIFT.
Crypto cross-border payments in, SWIFT Out
The prospect of cryptocurrencies as an alternative to SWIFT is certainly exciting and is very much doable. Even though there are some challenges, it could be addressed for all its compelling advantages. As blockchain continues to become more mainstream, and as more institutions and individuals embrace the technology, it looks like a matter of time before cryptocurrencies take over as the alternative to SWIFT.
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