5 Advantages of Blockchain Payment Processing
To most people, blockchain technology is an enigma that seems to only relate to cryptocurrency. But to us, it’s so much more.
While cryptocurrency is where blockchain started, years of innovation have developed it into a technology that makes transactions easier in various settings, including the B2B payment landscape.
In this article, we’ll discuss some advantages of blockchain payment processing over more traditional payment methods (including paper checks and credit cards) and why blockchain is the future of B2B payments.
More Centralized Recordkeeping
It can be easy to lose track of records and proofs of payment with manual payments, like receipts and invoices. This is even true with many forms of digital payment. If you aren’t using a streamlined ERP or financial control software service, it can be easy to lose track of payment history.
With a blockchain payment system, none of that is a concern. For each of your clients, you’ll be able to see full records of their transactions with your company and easily verify them. This can help you keep track of what is owed to you and will be useful when completing month and year-end accounting tasks.
Blockchain coding is immutable, meaning that any changes made can not be undone. For every transaction, there is always clear evidence created, and there’s nothing either party can do to change alter that evidence after the fact.
It is also incredibly secure. While other digital payments methods are ripe for hacking, blockchain payment processing is much harder for cybercriminals to access. That’s because it lives on a shared system, and being outside of that system makes it next to impossible to access it.
No Third-Party Involvement
Blockchain powers cryptocurrency, one of the most disruptive payment processes to date. Cryptocurrencies rely on blockchain because it offers a decentralized source of information. Meaning, a third-party entity is not involved in monitoring and managing the transactions involving the cryptocurrency. It allows online investors to bypass middlemen and regulators (including governments), making it possible to trade digital currency on a global scale.
While this helps cryptocurrency remain relevant, it also allows the two sides of a transaction to have direct communication. Since there is no longer a third party like a bank or a loan operator completing the transaction for the purchasing party, both sides of the transaction know precisely how the payment is being processed.
Additionally, having no involvement with a third party for the transaction means no third-party transaction fees. With blockchain, you only need to spend what is necessary to complete a transaction—no hidden or extra fees.
Blockchain technology also fosters increased trust on both sides of a B2B transaction. This is aided by two features of blockchain: its immutable history and its file-sharing capability.
Since blockchain has an immutable history that updates with every transaction, both the vendor and the buyer can see when their transaction is completed. No longer will there be any doubt or discrepancies in invoices because each party can hold one another accountable using the blockchain as a reference.
Meanwhile, the file-sharing capability of blockchain means either party can check the chain code at any time—neither of them can lock the other out. As a result, the data is entirely open and transparent for all parties to see.
Faster Payments with Smart Contracts
One of the most practical uses for blockchain is its 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 the transaction process sooner than ever before.
Is Blockchain Right for You?
We’ve listed some serious advantages of using blockchain for payment processing, but is it the right thing for your B2B business? We think so. After all, what B2B organization couldn’t benefit from a payment service that offers superior security and data transparency?
If you want to learn more as you research 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 of the more pressing questions regarding how blockchain can improve your transactions and how it can be integrated into your system.