Ripple has hailed the way in which blockchain can be leveraged to settle international transactions. It has been said that IT service businesses will largely feel the positive impact. Per an estimate by Ripple, worldwide spending on IT services is expected to touch $1.5 trillion this year. Companies have started looking overseas for new talent, thereby removing all geographical barriers to a person working for a company.
However, there remains a concern pertaining to how payments are made. Companies say that spreading their global network helps them maintain a 24*7 functioning model. What really causes trouble is how the payments are made. The challenges for cross-border transactions are speed, cost, and success rate.
It can take somewhere between 2 and 5 days for payments to be processed, and it can be as expensive as charging $100 for every transaction. Moreover, the error rate is 4–6%. It takes time for the companies to know that their payment has failed. This delays the settlement of the transaction, despite incurring the said costs. There is also the problem that companies are expected to maintain a pre-funded account on either side for liquidity.
Blockchain is emerging as the preferred solution for global payments because of instant payment settlement, streamlined vendor payments, and improved transparency.
Instant settlement falls in the 3-5 seconds range when transactions are executed over the blockchain. This is a larger reduction in the time taken to execute the transaction. Compare that to 2–5 days, and it is only obvious to assume that a larger number of companies will eventually make a transition to blockchain to back their payment methods. Ripple Payments is known to have the reputation of processing a transaction in a couple of seconds.
Simplifying vendor payments could entail several things, including doing away with the need for an intermediary like the bank to handle transactions. On the other hand, it refers to the freedom to make payments instantly. No matter where they are located, vendors, suppliers, and employees are all entitled to flexibility. Ripple Payment does not require liquidity funding from any source, making it a reliable partner. This frees up funds that businesses can use to make other investments.
Finally, blockchain-backed payment solutions bring down costs and improve transparency. Ripple Payment shows pricing up front along with the prevailing FX quotes. Moreover, it assists with detailed payment data for reconciliation.
International suppliers gain an advantage when they are able to expand their supply chain, enabling all their partners to make payments in local currencies.
It is convenient to integrate Ripple Payment and boast the payment infrastructure. Ripple Payment comes with a simple API that can enhance the experience of all the parties involved in the business.
These are based on the Ripple guide. The guide is titled Accelerating Global Payments for Your IT Services Business.