5 Advantages of Blockchain Payment Processing
To most people, blockchain technology is an enigma that only relates to cryptocurrency. But to us, it's so much more.
While blockchain's history intertwines with crypto, specifically bitcoin, years of innovation have developed it into a technology that makes transactions easier in various settings. This includes the B2B payment landscape.
Today, blockchain technology isn't just for crypto payment gateways. It's been adopted for secure and accurate transactions.
Blockchain can reduce 30% of banks' infrastructure costs. Around 60% of CIOs planned to integrate blockchain into their processes by the end of 2022. And so far, blockchain technology has processed over $270B in transactions. It's a big deal.
In this article, we'll discuss blockchain payment processing's advantages over more traditional methods and why blockchain is the future of B2B payments.
1. Centralized Records: An Optimized Payment System
You've probably heard a lot about decentralization. It is a blockchain network consolidating and streamlining data for financial services and accounting professionals.
Record keeping is crucial for payment processing. With the popularity of cross-border payments, accurate and verifiable paper trails are critical. But paper-based systems, Excel sheets, and manual ERP data entry can't support the scale B2B payment workflows require.
With manual payments, like receipts and invoices, losing record track and payment proofs is easy. Without automation, you're stuck with labor-intensive data-entry processes, particularly matching invoices to payments and bank statements. This applies to many digital payment forms, streamlined ERP, or financial control software services.
With a blockchain payment system, these concerns are history. You'll be able to see each client's complete transaction record and easily verify them. These records cannot be edited on a blockchain, also called a distributed ledger. Changes are logged separately, making it easier for teams to keep their records audit-ready and prevent fraud. At the same time, this can help you keep track of what is owed to you and will be helpful when completing month and year-end accounting tasks.
2. Built for Security
One of the main appeals to using digital currency or a blockchain payment solution is its security features. From the beginning, every distributed ledger had security backed into the software. In terms of crypto, privacy was often created through a highly encrypted cryptocurrency wallet and automatic transactions. Blockchain coding is also immutable, meaning any changes can not be undone. We use this in our Assurety feature, generating digitally notarized records for each transaction.
For every transaction, there is always clear evidence created. There's nothing either party can do to alter that evidence after. This makes it the ideal payment solution for fiat currency.
While other digital payment methods are ripe for hacking, blockchain payment processing is much more complex for cyber-criminals to access. That's because it lives on a shared system. Each blockchain network is built differently. But, in most cases, a hacker must take over more than 51% of a ledger's nodes, distributed across hundreds, if not thousands, of computers.
3. Streamline Processes with No Third-Parties
Blockchain powers crypto, one of the most disruptive payment options to date. Cryptocurrencies rely on blockchain because it offers a decentralized source of information. This means a third-party entity is not involved in monitoring and managing transactions. It allows investors to bypass intermediaries and regulators (including governments), making it possible to trade digital currency globally. It also decreases transaction fees.
Blockchain also provides a payment solution allowing the two sides of a transaction to communicate directly. Since no third party completes the transaction for the purchasing party, both sides know how the payment is being processed.
Additionally, having no involvement with a third party for the transaction means no fees. With blockchain, you spend what is necessary to complete a transaction.
4. Improved Data Transparency
Blockchain technology fosters increased trust on both sides of B2B payments. Two factors contribute to this: immutable history and its file-sharing capability.
Since blockchain has an immutable history that updates every transaction, the vendor and the buyer can see when their transaction is completed. Discrepancies in invoices will no longer exist as each party can hold the other accountable using blockchain as a reference.
The file-sharing capabilities mean neither party can check the chain code or lock the other out. As a result, blockchain payments are open and transparent for all parties to see.
5. Faster Payments with Smart Contracts
One of the most practical blockchain uses is enabling power to speed up payment processes using smart contracts. These contracts are built into the blockchain code as "if/then" scenarios. For example, "if" a purchaser orders a product or service from a vendor, "then" the vendor will send an invoice for the appropriate amount. This automates invoice processing so companies can start and complete the transaction process used on contracts both parties agree on.
This highly transparent method reduces the time required to complete each payment process step. Vendors won't forget or misplace your invoice, so you won't spend hours collecting payments.
You'll get paid faster without adding to your workload.
Is Blockchain Right for You?
We've listed some serious blockchain advantages for payment processing. But is it the right thing for your B2B business? After all, what B2B organization couldn't benefit from superior security and data transparency? Choosing a blockchain payment solution doesn't mean you need to accept crypto payments. You get the best part of both worlds.
To learn more about blockchain as a payment option, we encourage you to read our eBook on Why B2B Companies Need to Adopt Blockchain Payments. In it, we answer some pressing questions on how blockchain can improve your transactions and integrate into your system.