Top Use Cases of Blockchain in Payments

With no central authorities to govern blockchain-based payment systems, businesses and users can finally benefit from its decentralized and corrupt-free feature, in addition to improved security, cost-effective fund transfers, and accountability. Fortunately, you can apply blockchain solutions in most sectors and business functions. 

For a comprehensive picture of how blockchain has revolutionized payment systems, below is a list of blockchain in payments use cases, including how each benefits the users and businesses. 

• E-commerce Payments

The acceptance of blockchain payments in e-commerce is gaining traction worldwide, helping address bottlenecks usually associated with traditional payment systems. eCommerce mainly relies on building trust between the seller and the buyer, and blockchain involvement in the field helps foster lasting trust by enabling secure payments. 

Buyers can trust blockchain-powered eCommerce platforms with their hard-earned money without fearing tampering by hackers. Buyers also enjoy reduced fees when making payments, which is not primarily the case when paying via traditional banks, which charge higher. Customer privacy is also upheld; buyers can track payment status and shipment in real-time.

• Digital Identity

Digital payments are prone to fraud and identity theft. Securing and verifying identities is an integral step in making online payments, and blockchain has proved reliable in storing digital identities in a tamper-proof ledger that cannot be manipulated. Blockchain records are immutable and, thus, hard to compromise by editing or deleting. This reliability is further enhanced by smart contract development, ensuring that all transactions are executed precisely as programmed without any possibility of fraud or interference.

Businesses can verify their customers’ identity in effortless KYC procedures by integrating blockchain into their payment system, keeping fraudulent activities that can lower customer trust at bay. The smart contracts innovation in blockchain also plays a significant role in upholding identity verification by enforcing contracts only after involved parties meet the predefined terms and conditions. 

• Invoice Financing

Another use case of blockchain in payments is that businesses can reduce the hassle of obtaining invoice financing from third-party banking institutions or investors by introducing blockchain to the financing process. Entrepreneurs can improve their invoice financing by relying on blockchain’s immutability and smart contract features to protect payments from unauthorized parties. 

Invoice records are hard to tamper with once recorded in a blockchain network and are only accessible to verified participants. Automating invoice financing also plays a critical role in cutting costs since intermediaries are not involved. 

Also, through blockchain adaptation for invoice financing, businesses can tokenize their invoices, allowing more investors to own fractions of the invoice, thus increasing liquidity. 

• Subscription Services

Most businesses offering their services through a subscription-based model can leverage blockchain for benefits such as improved efficiency, security, and transparency. Users can pay for services or products using digital coins or tokens without worrying about the safety of the transactions. 

Blockchain’s smart contracts aid in reducing potential billing disputes since the agreements are written in code, making altering them difficult. Implementing blockchain in payments also gives businesses an advantage in rewarding their customers through a loyalty program, a crucial move in achieving customer retention. 

On the transparency issue, customers can access their payment history as stored in the ledger and exercise control over their records. Content creators are other beneficiaries of blockchain in payments, enabling them to receive fair and deserved compensation based on subscriptions and other parameters. 

• Point of Sale Systems

Fast payment settlements, security, and transparency are consistent benefits of blockchain in payments, which also apply to POS systems. Retail businesses, among other sectors that offer POS-based services, can mitigate fraud by relying on blockchain’s capability to secure POS systems, which is crucial in building long-term trust in customers, suppliers, manufacturers, and other stakeholders. 

Blockchain is also essential in managing loyalty programs at POS, enabling customers to redeem gift card their hard-earned points for approved rewards. Businesses can also automate POS processes, which are necessary in facilitating automatic payments based on pre-agreed terms and conditions. 

• Remittances

Remittances revolve around transferring funds from migrant workers to their loved ones back home to help them meet their financial obligations. For the longest time, migrant workers relied on traditional banking institutions to send funds to their families, processes prone to delays, higher transaction charges, and fraud, among other issues. 

With blockchain adaptation in remittances, there are no intermediaries, and workers can enjoy fast fund transfers, which is essential in dealing with emergencies back in their home country. The involvement of blockchain in remittances also significantly reduces anti-money laundering because reliable remittance companies comply with KYC (Know Your Customer) regulations.