Cross-border transactions, SME payments, and remittances are among the most broken parts of the financial system today. The reasons are clear:

• Cross-border payments: A US $156 trillion industry, yet transactions take 2-5 days, riddled with intermediary fees and FX charges. SWIFT, the dominant network, is effective but slow.

• SME transactions: Small businesses struggle with cash flow due to delays in payments and high transaction costs. Access to credit remains limited.

• Remittances: Despite being a financial lifeline for millions, global remittances cost an average of 6-10% per transaction (World Bank), disproportionately impacting low-income families.

These challenges point to a critical need for faster, more secure, and cost-efficient alternatives—and blockchain has emerged as a strong contender.

How Blockchain is transforming payments

Blockchain technology introduces a trustless, decentralized, and transparent system that solves the inefficiencies of traditional payment networks. Here’s how:

1. Instant cross-border payments

• Traditional international payments rely on intermediaries (banks, payment processors), leading to delays and high costs.

• Blockchain removes the middlemen, enabling real-time settlement at a fraction of the cost.

• Examples: Ripple (XRP) is already facilitating cross-border transactions in seconds, compared to the SWIFT network’s 3-5 days. JPM Coin by JPMorgan is streamlining interbank settlements.

Ripple is a blockchain-based platform designed to make cross-border payments faster, cheaper, and more efficient. It uses its cryptocurrency, XRP, as a bridge currency to facilitate transactions between different currencies. Major banks and payment providers like Santander and American Express are exploring Ripple’s technology for cross-border payments.

2. Lower transaction costs

• Banks and payment processors charge high fees for processing transactions.

• Blockchain-powered payments cut down costs by eliminating intermediaries and reducing infrastructure overhead.

• Stablecoins (like USD Coin, USD Tether) are playing a key role in reducing remittance costs by providing a digital, borderless alternative to fiat transactions.

Note: Stablecoins are type of cryptocurrency pegged to the US Dollar, aiming to maintain a 1:1 value ratio with the currency.

3. Fraud prevention & security

• Traditional banking is vulnerable to fraud, data breaches, and identity theft.

• Blockchain’s immutable ledger ensures transactions cannot be altered or duplicated, significantly reducing fraud risk.

• Smart contracts automate transactions, ensuring compliance and eliminating the possibility of manipulation.

4. SME access to capital & credit

• Blockchain-based financing platforms provide SMEs with alternative credit sources beyond traditional banks.

• Decentralized Finance (DeFi) enables instant loans, transparent credit assessments, and lower interest rates compared to conventional banking.

• Singapore’s blockchain-based trade finance solutions are helping SMEs gain faster access to working capital.

In Singapore, the convergence of technology and finance is unlocking unprecedented opportunities for small and medium enterprises (SMEs). Traditionally, SMEs have struggled to access working capital due to cumbersome processes, lack of trust, and excessive documentation in trade finance. Blockchain technology is now transforming this reality.

Through initiatives like TradeTrust and the Networked Trade Platform (NTP), Singapore has created a seamless, transparent ecosystem for trade finance. These platforms leverage blockchain to digitize critical documents—such as invoices and letters of credit—ensuring traceability and eliminating inefficiencies. Smart contracts further streamline the process by automating payment releases when specific conditions are met.

Consider DBS Bank’s blockchain-enabled solutions, where SMEs can now secure financing in half the time compared to traditional methods. This isn't just about speed; it's about empowering smaller businesses to compete on a global scale, armed with trust and efficiency embedded in every transaction.

Singapore’s example underscores a universal truth: innovation, when harnessed thoughtfully, has the power to level the playing field. Blockchain is more than a technology; it is a catalyst for growth, fostering resilience and inclusivity for SMEs navigating an increasingly interconnected world.

5. Financial inclusion & faster remittances

• Billions of people remain unbanked or underbanked, relying on cash-based, high-fee remittance channels.

• Blockchain-powered wallets (e.g., Stellar, Celo, BitPesa) allow users to send and receive payments directly, without a bank account.

• Example: El Salvador’s Bitcoin adoption has reduced remittance fees, saving millions in transaction costs annually.

What’s holding Blockchain payments back?

Despite its promise, blockchain payments haven’t gone fully mainstream yet. Why?

1. Regulatory uncertainty: Many governments remain sceptical about blockchain due to concerns over money laundering and compliance.

2. Scalability & energy concerns: High transaction speeds (like Visa’s 24,000 TPS) are hard to match on certain blockchain networks.

3. Interoperability issues: Different blockchains don’t always “talk” to each other seamlessly.

But solutions are emerging—Layer 2 scaling (Polygon, Lightning Network), regulatory frameworks (MiCA in Europe), and CBDCs—paving the way for wider adoption.

Layer 2 scaling refers to technologies built on top of existing blockchain networks to improve their performance, particularly in terms of speed and transaction cost. Layer 2 scaling helps blockchains handle a much higher number of transactions without compromising security or decentralization.

CBDCs are digital versions of a country’s currency, issued and regulated by its central bank. Unlike cryptocurrencies like Bitcoin, CBDCs are centralized and maintain the stability of the local economy.

The future: Where do we go from here?

The transition to blockchain-powered payments is inevitable. Over the next five years, we will see:

• A hybrid payment system—where traditional banks integrate blockchain-powered rails.

• Regulatory clarity—governments developing clearer policies around blockchain transactions.

• Enterprise adoption—corporations leveraging blockchain to optimize supply chain finance and global payments.

• New business models—DeFi-powered lending, smart contract-based transactions, and blockchain remittance startups transforming financial services.

The question is no longer if  blockchain will redefine payments—it’s when.