How A Blockchain Payment Processor Can Improve Industry Transactions
Blockchain technology first gained notoriety because of the use of cryptocurrencies, an application which typically only involved the flow of money. Most of the currency being transferred back and forth was essentially detached from the flow of goods.
For a while, many people simply held onto their crypto and treated it as an investment.
Now that companies are using blockchain to work in different areas, like supply chains, there’s both a flow of money going in one direction and a flow of goods in the other.
Linking the flow of goods and money becomes extremely important, because once it’s been done, companies can to do things like automate payments or confirm transactions.
In fact, it’s a natural progression for supply chain participants to adopt blockchain payment processors. What results is a system that increases efficiency, automation, and liquidity in the supply chain.
Here’s why it will be so important going forward:
A crypto payment system introduces greater liquidity into markets.
Connecting a supply chain or retail platform to a payment processor provides a different means of transacting and making payments — opening up new sources of liquidity for the businesses involved.
Even if a company is cash forward, they can use other assets or currencies to transact between supply chain participants.
A blockchain-run payment system would allow more businesses to actually use the funds they have in cryptocurrency for legitimate business transactions. Our company occasionally pays contractors with bitcoin, but we can’t currently use it to pay manufacturers or other supply chain participants.
An efficient payment processor would provide companies with nearly instant, diverse ways to use their assets, allowing for improved liquidity and decreased liability.
Streamlined payment improves efficiency and automation.
Supply chains already have individual payment processing systems, but they’re disjointed. They don’t really work in a seamless, elegant way.
And that inefficiency has consequences for the businesses using them.
For example, even our team at Chronicled, which specializes in supply chains, isn’t immune to the delays or hassles of working with an outdated system.
The cryptographic seals we use look fairly simple, but they require a number of different parts. One company creates the antenna, and another builds the chip that turns it into the NFC inlay. A third vendor places all of it in a tamper-proof sticker. Now, our team isn’t ordering vast quantities, and none of these vendors are located exceptionally far from each other. But the task of filling out orders and completing them is incredibly time-consuming.
Processes like this can take months, depending on what type of product the company is working on.
While many of these systems could become more efficient by digitizing and automating the flow of data and information, it’s not enough.
Digital documents aren’t valuable if they’re being sent to someone with a blockchain-based payment processor. And as more companies adopt crypto and blockchain technology, exchanging that value is going to become much more important.
A point-to-point transaction can reduce costs for companies.
There’s been a lot of news recently about all the things individuals can now buy with cryptocurrency.
And while it may be cool to pay for a pizza with bitcoin, payment processor systems on blockchain are best for when you’re dealing with a large amount of data and transaction volumes. You want to start in areas where there are extreme inefficiencies, which usually means large industries and enterprises. That’s where there’s more room to innovate and improve the existing structures.
Right now, those existing structures are often specific to one industry or company — and costly to build.
A blockchain payment processor takes the burden off individual companies by providing a single solution for everyone in a supply chain or industry.
In fact, we’re seeing it happen right now with companies like CoinPayments, BitPesa, Coinbase, and Aliant who are all attempting to grow adoption of their own payment processing systems.
Allowing companies to process transactions automatically and avoid or significantly lower transfer fees is a huge leap forward in efficiency and cost savings.
It may not be as flashy as buying Starbucks with bitcoin, but it’s where we’ll see real, measurable improvement in industries going forward.
Thanks for reading!