Digital Currencies and the Future of Global Transactions

Over the past few years, the number of online retail stores accepting digital currencies as payment has increased. But they are not alone in this, as several other industries have been capitalizing on the perks that these currencies offer. For example, casinos have increasingly offered crypto payments to their clients. Some have even offered casino bonuses to players who use these alternative payment options to incentivize them.

Cross-border payment processors have also thrown their hats in the ring, as have many other financial institutions. Based on these patterns, it is safe to say that cryptocurrencies are slowly shaping global transactions and could easily be the future of payments. We look at why this is the case. 

Why Are Digital Currencies Taking Over?

When we talk of digital currencies, we refer to cryptocurrency payments powered by Blockchain technology. These decentralized currencies may have been a new kid on the block a few years ago. But now, they have become more commonplace, owing to the following perks: 

1. They Are Fast

One common challenge with traditional payments is that they take a long time. Take international bank payments, for example. These rely on intermediary banks to process the payments and must undergo several checks. As a result, payments can take up to a week to reflect in the recipient’s account. What’s more, banks have fixed operating hours, which further slow verification processes. As you can imagine, this time-consuming aspect acts as a barrier to businesses and people who want to make and receive payments much faster. Of course, e-wallets and card payments are much faster, but they, too, are not immediate, and the parties involved must wait for the necessary clearances. 

Digital currencies have attracted people because they eliminate this waiting time. Since these currencies allow people and businesses to move money directly from their own accounts to the recipient’s account without an intermediary, the transactions are almost instantaneous. What’s more, there are no set operating hours so that people can transact at any time of day. This reduced waiting time also helps people avoid potential losses from currency conversions during long settlement periods. 

2. They Are Affordable

Time is not the only barrier when it comes to conventional payments – the cost of transfers is also a challenge. Again, we will use banks as our example. Suppose person A wants to make a payment to business B in a foreign country. They will need to pay several fees to do this, including: 

• The processing fee – this is payable to the originating bank for the service. 
• The intermediary fee – this is payable to the bank that handles the payment between the two banks. 
• The conversion fee – this depends on the exchange rate. 
• The duties – many regions have specific charges for any international transactions. 

It is also important to note that these charges vary depending on the amount being transferred, as most banks charge processing fees as a percentage of the amount being sent. For this reason, sending money abroad or even domestically is often expensive. Card and e-wallet payments are also quite expensive, as these processors charge a transfer fee that, like with banks, depends on the amount being transferred. 

Banks, e-wallets, and card processors charge these fees because they have overheads to cover, but digital currencies do not incur similar operating costs. After all, there are no intermediaries to handle transfers, and without them, people and businesses can easily transfer money to each other at almost no cost. 

3. They Are Accessible

While we have come a long way in digital solutions, many regions of the world remain unbanked, so people and businesses do not have easy access to financial services. Understandably, this makes it hard for them to procure services and products.

But with digital currencies, they, too, can connect with the rest of the world, which can stimulate economic growth in these underserved regions.