How blockchain technology can reshape the security and efficiency of cross-border e-commerce payment and settlement

Blockchain technology, as a type of distributed ledger technology, has received widespread attention in the technology and financial fields in recent years due to its unique characteristics of decentralization, openness and transparency, non-tampering and non-forgery. Especially in the field of cross-border e-commerce payment and settlement, the application of blockchain is gradually showing its huge potential.

Blockchain technology overview

Blockchain technology is a new distributed infrastructure and computing paradigm. It uses block chain data structures to verify and store data, generates and updates data through distributed node consensus algorithms, and uses cryptography to ensure data transmission. with access security and use smart contracts to program and manipulate data. Simply put, blockchain technology allows every participant in the network to participate in the transaction recording process, select the best bookkeeper through a mechanism called “mining”, and record the latest transactions. Synchronized to all nodes, ensuring information consistency and non-tamperability.

Application of blockchain in cross-border e-commerce payment

Solve the problems of traditional payment system

Traditional cross-border e-commerce payment and settlement systems usually rely on centralized financial institutions such as banks to operate. Although such a system is stable, it has many shortcomings: high transaction fees, long processing times, and potential security Risks etc. In contrast, blockchain technology can significantly improve payment efficiency and reduce costs by removing intermediaries and simplifying processes.

Reduce operating costs and expenses

Because blockchain eliminates the need for intermediaries, the fees and other overhead associated with it are significantly reduced. According to McKinsey’s predictions, the application of blockchain technology is expected to reduce the cost of each B2B cross-border e-commerce payment from an average of US$26 to around US$15 globally. The cost savings mainly come from reducing the network maintenance fees of intermediary banks. and expenses such as compliance inspections.

Improve security and transparency

The distributed ledger characteristics of blockchain enable it to provide unprecedented security for cross-border payments. Every transaction will be encrypted and distributed throughout the network, making it extremely difficult to tamper with historical records. In addition, all participants can view transaction records at any time, increasing the transparency of the entire system.

Speed ​​up transactions

The point-to-point payment model realized through blockchain technology allows funds to flow directly from one party to another without going through a third-party institution, thereby achieving near-instant fund transfer and meeting the needs of cross-border e-commerce for fast and convenient payments. .

Comparison of existing payment systems

Currently, most cross-border e-commerce businesses still rely on the SWIFT network for payment and settlement. Although SWIFT has extensive global coverage and support, it still uses a traditional model based on agent banks, which means that every cross-border transfer needs to go through at least one agent bank to complete, which not only increases the transaction time costs and economic costs, but also brings additional safety hazards.

Conclusion

Although blockchain technology has obvious advantages in cross-border e-commerce payment and settlement, its large-scale application still faces some challenges, such as how to better adapt to the existing regulatory framework. However, with the advancement and improvement of technology, we have reason to believe that blockchain will become an important force in promoting changes in the cross-border e-commerce payment industry in the future.