A recent report from fintech giant Ripple has shed light on the increasing role of cryptocurrencies and blockchain technology in cross-border payments, projecting that by 2027, the value of this sector will reach a staggering $250 trillion.
The global payments industry has been undergoing a significant transformation, with a growing emphasis on user experience and modern interfaces to meet the rising consumer demand for digital-first banking services. Services, the report notes, pointing out that the underlying infrastructure that facilitates the movement of money from one account to another is ripe for improvement.
The report also suggests that crypto and blockchain can enable the efficient transfer of money. According to Ripple’s 2023 New Value Report, payments are the most likely driver of crypto adoption for 44% of the respondents, and almost half of them think that cross-border payments is a key use case for crypto.
Legacy rails for cross-border transactions are slow and costly, taking days to settle, te report adds. On the other hand, blockchain and digital asset technologies offer a smooth global network that allows payments to be made and received anytime, anywhere, instantly with lower fees and full transparency.
The report also states that mobile banking is expected to be used by over 65% of the US population by 2025, while online banking is projected to reach nearly 1 billion users in Asia by 2024. However, these customers are attracted by the well-designed user experiences that hide the outdated, fragmented infrastructure behind them, it says.
Ripple notes that cross-border payments are one of the most important and challenging aspects of the global economy, with traditional payments systems used to facilitate them now being outdated, inefficient, and costly as they rely on legacy rails built decades ago.
Moving funds across borders is also hindered by various factors such as global regulations, compliance requirements, currency exchanges, time zones, and limited hours. Frictionless global payments could be instead powered by blockchain technology, which enables faster, cheaper, and more transparent payments by facilitating interoperability between tokens or chains.
According to the report, value of cross-border payments is expected to reach $250 trillion by 2027, and more than 80% of global finance leaders expect to use crypto in their businesses in the next three years.
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