How Trading Companies Stay Competitive in 2024

Best Payment Models for International Trade 2024

In recent years, the international trade industry has undergone major changes thanks to the integration of cryptoassets. Traditional international trade, conducted primarily in fiat currencies, has long been burdened by complex processes and high transaction costs. However, digital assets are revamping this age-old model.

Cryptoassets in international trade

It is clear that the integration of cryptoassets, particularly Bitcoin, into mainstream financial transactions is impacting global commerce. In fact, the global Bitcoin payment market is expected to grow to $4827 billion by 2032; over 66% of this market is anticipated to be dominated by personal remittances.

Blockchain payment solutions streamline remittance processes, facilitating faster and more cost-effective fund transfers, especially when sending money to countries with high financial exclusion. Half of the top 20 countries widely using cryptoassets for payments are lower-middle-income nations.

Trading companies engaging in international transactions can benefit from the decentralised and secure Bitcoin payment ecosystem. However, Bitcoin's price fluctuations remain a challenge, requiring careful consideration for trading companies looking to use cryptoassets in their transactions. Despite this challenge, the overall market expansion indicates a growing acceptance of digital assets, which is why many trading companies are increasingly considering accepting digital currency.

Unlike traditional banking systems that can take days or weeks to settle international transactions, digital assets operate on decentralised networks and confirm transactions within minutes, offering a swift solution crucial in time-sensitive situations. For instance, a manufacturing company in China urgently requiring raw materials from a European supplier can complete the transaction almost instantly using Bitcoin or other cryptoassets. 

Additionally, adopting cryptoassets can significantly reduce transaction costs compared to traditional remittance methods, making it an attractive option for businesses looking to optimise expenses. For example, an e-commerce platform based in the United States sourcing products from a South American supplier benefits from reduced transaction costs, contributing to increased profit margins and competitiveness globally.

While the potential benefits of incorporating digital assets in international trade are evident, challenges and regulatory considerations must be addressed. Differing regulations across countries pose a hurdle, with some nations embracing cryptoassets while others strictly regulate or even ban their use in international transactions. To overcome this, international trade companies must seek expert legal advice to ensure they operate within a country's legal framework and adhere to regulatory requirements.

Companies facilitating international trade

A few industry titans facilitating international trade through cryptoassets include BitPay, Coinbase, and Stellar (in partnership with IBM).

BitPay is a digital asset payment provider facilitating cross-border transactions by enabling merchants to accept cryptoasset payments. The company's technology streamlines international trade, ensuring a smooth experience for buyers and sellers. Meanwhile, Coinbase Commerce, a service by the digital currency exchange Coinbase, plays a vital role in the global e-commerce ecosystem. Tailored for businesses, it also facilitates cryptoasset payments, providing an efficient avenue for cross-border transactions.

In collaboration with IBM, Stellar (XLM) introduced Blockchain World Wire, a cross-border payment system designed for cost-effective transactions. The system leverages the Stellar network and uses XLM digital currency as a bridge to facilitate currency conversion. IBM's extensive network connects financial institutions globally, enabling real-time settlement of transactions. 

In addition, the X app is expected to roll out in-app payment services around mid-2024. However, whether this feature will extend to supporting payments beyond traditional fiat currencies is yet to be confirmed.

How XEROF helps international trading companies

XEROF, a regulated entity with key partnerships with leading Swiss banks, is well-prepared to facilitate international trade transactions. Our ability to quickly settle transactions from digital currency to fiat into a third-party account streamlines the process for all involved parties and allows users to monitor the execution of transactions closely. Furthermore, funds exchanged from digital assets to fiat are securely held in segregated wallets, ensuring the safety and security of transactions.

In addition, XEROF recognises that to fulfil operational and regulatory liquidity needs, a company's treasury department will often need to move funds within its organisation. When such transactions involve transfers between national banking systems, blockchains can offer faster processing compared to conventional payment channels. Additionally, leveraging fiat-pegged stablecoins (such as USDT or USDC) enables businesses to address liquidity challenges linked to transferring funds from emerging markets. Because we understand that our clients use both fiat cryptoassets for different purposes, we allow our clients to send fiat and exchange to stablecoins easily.

If you are interested in exploring customised solutions for international trade or want more information, please contact us to schedule a meeting.