In the world of global trade, paying a supplier is usually one of the most difficult aspects of business. It is an industry that is reliant on wire transfers, which is the most popular way suppliers are paid. However, between trips to the bank, FX fees, bank fees, lack of internet security, complaints of money never reaching its destination, and poor regulation in many countries, wire transfers have been shown to be less than optimal, to say the least.
Recently, Marwan Forzley, the Chief Executive of Align Commerce has appeared in publications such as New York Time, The Guardian, and Tech Crunch to explain the concept of blockchain technology and its benefits to payment processing. He characterizes this technology as a constantly growing series of virtual public ledgers of all Bitcoin transactions that has ever been performed. How does this affect payments? For anyone who understands what Bitcoin is (an open source, peer-to-peer currency), this allows cross-border payments to be more efficient by eliminating all the friction that occurs within it, such as FX rates and Swifts – which can be expensive and delay the money’s transfer from one end to the other by days, exposing its customers to currency volatility.
What Align Commerce has done is harness the blockchain technology to enable businesses and payment platforms to send and receive payments in their local currency via a simple, frictionless and inexpensive process.
In other words, if a business in the US wants to bill their customer in Spain US$6,000, the Spanish clients can opt to send the payment in Euros using the AC platform for a flat fee of 1.9%. In turn, Align Commerce transfers the money to the blockchain, exchanges it with cryptocurrencies and then to the receivers’ currency. As a result, the US company end up with more compared to what they have received via wire transfer after taking into consideration how much banks charge for currency conversions. The time it takes to receive the payment is also greatly reduced compared to more traditional payment methods.
Because of the relationship that Align Commerce has with local banks and Bitcoin exchanges, the company can afford not to charge any fees from the sender or the recipient either. With Align Commerce, the FX fees are transparent, indicating the exact rate on the invoice, while the dashboard can be used to track the movement of funds in real time (much like how a package is tracked online), eliminating the uncertainty of whether or not the payment was received – all with the help of blockchain technology.
Align Commerce emphasizes the need for real-time tracking because there have been numerous stories of money getting lost in transit with wire transfers or of amounts received being far less than what was expected.
Real-time tracking also shows proof of transaction, giving businesses a deeper sense of security by eliminating the threat of fraud. The funds are deposited directly to the receivers’ account in the exact amount expected, all in their local currency.
In the complex world of global trade, having a simple and reliable payment method is crucial to a business’ success. With the development of new technology like blockchain, the problems that people encounter with payments are addressed and eliminated. With companies like Align Commerce utilizing such technology, businesses will benefit from smoother, faster, and more transparent payment transactions.