Blockchain’s Intro To Global Payments Ecosystem

As corporates continue to find themselves inspired by surging bitcoin values and a massive crypto haul by Tesla, the digital currency ecosystem is beginning to drum up more interest within the corporate treasury and B2B payments arena.

Yet despite cryptocurrencies’ promises of faster payments, mitigated risk and boosted transparency, the corporate ecosystem is far from ready to dive fully into the market. That doesn’t mean organizations can’t achieve similar benefits from crypto’s underlying infrastructure, blockchain, according to Carrie Sattler, CEO of RowanPay.

The company quietly announced earlier this month that it is gearing up to launch its payments network in Q2, a blockchain-powered gateway with its sights set on B2B and cross-border transactions. Speaking with PYMNTS, Sattler discussed some of the biggest friction points that its proprietary blockchain may be able to address, and how the network plans to fit within the broader ecosystem of both legacy and new systems hoping to tackle the same pain points.

Payment Rail Pains

B2B payments occurring on today’s traditional rails continue to face plenty of challenges — particularly when money is moving across borders. Among them is a lack of speed and visibility, especially when transactions bounce within the world’s correspondent banking system, with Sattler pointing to the high fees that global transactions can incur as a result of so many middlemen. Legacy wires are sluggish and lack transparency, meaning funds can actually get lost in the system, further delaying payment and settlement. When businesses already wait months to receive payment, further delays — and further costs — are unwelcome burdens.

According to Sattler, blockchain has the ability to address these challenges by nixing the pit stops as funds move from point A to point B, not only allowing for accelerated and transparent transactions, but also offering the ability to lower fees for end users.

In taking advantage of the immutability of blockchain, coupled with RowanPay’s investment in security, Sattler said the company’s network is able to offer a more secure infrastructure than other blockchain systems. It’s a foundation that can address other, more nuanced pain points in B2B payments, too, like the need to transmit data along with money in order to support matching and settlement workflows. Blockchain can also create the opportunity to automate transactions based on contractual agreements between buyers and suppliers, with the technology able to initiate a payment without manual intervention.

“When you’re talking about import and export, invoicing and bill pay can all be wrapped into one,” said Sattler. Security and immutability are key, offering the opportunity to address the friction of chargebacks and friendly fraud. “A lot of businesses, no matter who I talk to, have chargeback problems, and they don’t want that,” she noted, adding that B2B payments are not immune to such disputes.

A Broader Ecosystem

Sattler emphasized that RowanPay’s network is not promoting a “rip-and-replace” model for financial institutions (FIs). Rather, the company aims to present the technology as an addition to an increasingly populated ecosystem of payment rails and networks, many of which are innovating to tackle similar issues like a lack of speed, transparency and security. It’s no guarantee, however, that FIs and business end users will be ready and willing to adopt a relatively young technology like blockchain, with education a key component of gaining traction.

According to Sattler, the financial services ecosystem is not in a position to embrace a digital coin to facilitate the movement of funds. Between the costs and lengthy timeframe of exchanging a coin for fiat currency, it is simply too cumbersome to add any benefit to financial service providers or their customers.

Yet blockchain itself is in a position to not only cut friction for B2B payment stakeholders, but to also deepen connectivity between FIs that may be able to benefit from features like data transmission and greater visibility. “Banks can talk to each other” via blockchain infrastructure, said Sattler, pointing to the opportunity to nix the friction that FIs experience when having to manually batch payments to address any errors. Overall, though it may take some time, introducing a tangible blockchain-powered product will help the technology gain traction and find its place within the payments community.

“Blockchain is not going to go anywhere,” Sattler predicted.



About: Buy Now, Pay Later: Millennials And The Shifting Dynamics Of Online Credit, a PYMNTS and PayPal collaboration, examines the demand for new flexible credit options as well as how consumers, especially those in the millennial demographic, are paying online. The study is based on two surveys, totaling nearly 15,000 U.S. consumers.