Payment companies aspire to achieve efficient, secure, and compliant cross-border payment services through stablecoins, but developing such technology often requires high costs and deep accumulation. Cobo's one-stop cross-border payment stablecoin solution allows payment companies to quickly gain the capability for stablecoin cross-border payments without starting from scratch.
Written by: Alex Liu, Foresight News
Traditional cross-border payment challenges
As global economic integration deepens, cross-border payments, as a crucial link between trade and finance among countries, are becoming increasingly important. However, the various restrictions of traditional payment methods like ACH network transfers, UnionPay payments, Visa, and Mastercard make it difficult for enterprises to enjoy efficient and low-cost services.
Cross-border payment processes typically take several days, involving multiple layers of intermediary institutions for settlement, resulting in high fees and inefficiencies. Additionally, due to the differences in regulatory requirements across countries, enterprises are increasingly investing in compliance. This not only raises operational costs but also significantly diminishes user experience due to opaque charges and lengthy processes.
These issues have led businesses and individuals to eagerly anticipate more real-time, low-cost payment methods. The rise of stablecoins is precisely the breakthrough solution in this context.
Stablecoins combine the advantages of blockchain technology with the value stability of fiat currency, eliminating the cumbersome intermediary links in traditional payment processes through peer-to-peer transactions.
This innovative payment method not only significantly reduces transaction fees but also greatly increases the speed of fund circulation. Furthermore, regardless of where users are located, as long as they have a blockchain wallet, transactions can be completed. This efficient and accessible feature has led to the rapid proliferation of stablecoins in the global payment sector.
In 2023, the transaction volume of stablecoin payments exceeded $10 trillion, source: Coinbase.
In 2023, the transaction volume of stablecoin payments has exceeded $10 trillion, demonstrating the immense market demand for this payment method. Taking Bridge as an example, this company focuses on helping enterprises accept and use stablecoin payments, providing API interfaces that enable seamless conversion between fiat and stablecoins, supporting enterprises in conducting cross-border payments and conversions based on stablecoins globally, and even helping enterprises issue customized stablecoins. Its services not only significantly reduce payment time and costs but also allow enterprises to operate flexibly among multiple stablecoins.
The success of Bridge has also attracted the attention of payment giant Stripe, which ultimately acquired it for $1.1 billion. This case further highlights the commercial value and development prospects of stablecoins in the cross-border payment field and encourages more payment companies to focus on and attempt to enter this area.
However, traditional payment companies face challenges in laying out stablecoin payments. The barriers of blockchain technology, the complexity of compliance adaptation, and the requirements for risk control capabilities pose three major challenges on the transformation path of traditional payment companies.
Cobo solution: One-stop Web3 payment infrastructure service
Cobo's Web3 cross-border payment solution is designed specifically to address these pain points. This solution encapsulates complex blockchain technology into user-friendly modules, allowing payment companies to quickly launch stablecoin payment services without significant investments.
Cobo cross-border payment solution process
Simplifying technical development: Making innovation within reach
Cobo's cross-border payment solution offers a full-link functionality that meets diverse needs for payment enterprises, covering everything from cryptocurrency collection, wallet management, compliance and risk control, on-chain fund processing, asset management to fiat currency conversion. Its flexibility allows for on-demand access and usage.
Core functional modules
Acquiring:
Supporting full custody and MPC, providing payment enterprises with diverse wallet management mode choices, whether they prefer highly secure centralized management with full custody or a certain degree of autonomy with MPC mode, ensuring the safety and flexible allocation of funds.
Supporting automatic fund aggregation greatly simplifies the fund management process, improves fund utilization efficiency, avoids cumbersome manual operations, and makes fund management smarter and more convenient.
Equipped with powerful compliance and risk control functions, with an advanced AML system and comprehensive compliance solutions built-in, monitoring transaction risks in real-time to ensure every transaction is legal and compliant, effectively preventing various risk events, safeguarding the stable development of payment clients' businesses.
Clearing: Integrating a rich set of fund processing tools to help payment companies efficiently complete on-chain fund processing. For example, providing convenient exchange services to meet conversion needs between different currencies; supporting cross-chain switching to adapt to diverse blockchain ecosystems; and also offering wealth management features to help clients enhance returns on idle funds, optimizing liquidity and appreciation capabilities for funds comprehensively.
Settlement: Integrating multiple compliant OTC service providers and supporting crypto-friendly bank accounts, ensuring a smooth and legal conversion channel from crypto to fiat, providing payment companies with a complete fund settlement solution, enabling them to easily handle fiat currency conversion and settlement challenges in cross-border payments.
Moreover, considering the relatively high barriers to use and understand blockchain for traditional payment institutions, Cobo has carefully designed a series of functions that effectively shield users from the complexities of blockchain technology.
For example, it supports automatic aggregation features, relieving customers of the burden of complex aggregation operations; stablecoins cover gas fees, reducing customers' financial accounting burdens; one-stop KYC services simplify customer identity verification processes and comprehensively lower the barriers and friction of using blockchain, enabling payment customers to focus more on the expansion and innovation of their core business without being troubled by the complexities of blockchain technology.
Additionally, Cobo plans to introduce more automated features, such as allowing users to set payment workflows for automated payment processes, further enhancing customer experience and business efficiency, continuously creating value for clients.
Cobo provides one-stop resource docking services to help payment companies streamline the entire cross-border payment process. By integrating multiple compliant payment platforms and supporting rapid bank account openings, Cobo not only optimizes the fund clearing path but also significantly reduces the operational complexity for enterprises and enhances overall operational efficiency.
Compliance and risk control: The sword of Damocles in the payment sector.
Another major challenge faced by payment companies in cross-border payments is compliance and risk control issues.
Different countries and regions have varying regulatory policies for blockchain payments, from customer identity verification (KYC) to anti-money laundering (AML) to transaction monitoring (KYT) and data privacy protection, requiring enterprises to meet multiple requirements.
In response to traditional payment sector's regulatory concerns regarding blockchain, Cobo has incorporated a complete compliance system into its solutions.
Specifically, Cobo's compliance solution provides automated risk analysis tools and collaborates with several leading global compliance service providers to offer enterprises real-time policy updates and advice. Its built-in AML system can analyze the risk status of each on-chain transaction in real time, using intelligent algorithms to identify high-risk addresses and promptly block suspicious transactions. This comprehensive risk management capability enables enterprises to easily comply with regulatory requirements across different regions globally.
In addition, Cobo offers dual-mode wallet services, including full custody and MPC collaboration, to meet compliance needs in different markets. In full custody mode, based on Cobo's centralized custody wallet, enterprises can perform payment operations and asset management within compliance frameworks, greatly simplifying processes and enhancing efficiency; while the self-custody mode utilizes Cobo's multi-party computation (MPC) technology, enabling enterprises to customize risk control rules for flexible asset management and security assurance. In summary, full custody offers high efficiency and security, while the advantage of MPC lies in the flexible control and management it provides to enterprises.
Value-added services and ecosystem co-construction
In addition to providing payment functions, Cobo has designed a series of value-added services for enterprises. For instance, in response to enterprises' liquidity needs, Cobo has introduced a stablecoin wealth management module to help enterprises invest idle funds in low-risk on-chain investment tools, thus improving the efficiency of fund utilization. Furthermore, Cobo offers tailored technical and risk control solutions based on specific business scenarios to ensure that every enterprise can achieve success in its target market.
The actual effectiveness of the Cobo solution has been fully validated by the market. For example, a payment company integrated its digital currency wallet with its own system within just two weeks using this solution, successfully completing the first cross-border stablecoin transaction, providing strong support for business expansion.
As an open blockchain platform, Cobo not only focuses on the development of technical solutions but also strives to build a stable, secure, and compliant payment ecosystem that empowers upstream and downstream partners.
Cobo's cross-border payment solution provides a one-stop technical support service through an open architecture for various enterprises and institutions, helping them rapidly integrate into the global digital payment network. In addition, Cobo allows partners to deeply integrate their products with the platform, creating synergies and achieving value sharing. Service targets and partners include cross-border payment institutions, acquiring institutions, compliant OTCs, stablecoin issuers, card merchants, etc.
Conclusion: The time for Web3 payments is now.
Currently, the development trend of the global payment industry is becoming increasingly clear.
First, the demand for cross-border payments will continue to surge explosively. As the process of global economic integration accelerates, international trade, cross-border e-commerce, overseas investment, and study abroad sectors are flourishing, leading to higher expectations for the convenience, timeliness, and cost-effectiveness of cross-border payments.
Secondly, digital payments will comprehensively penetrate every subtle corner of social and economic life. Whether in high-end shopping centers in bustling cities or small shops in remote villages, and even mobile vendors in streets and alleys, digital payment methods will become standard, and the usage scenarios for cash payments will further shrink.
Moreover, security and privacy protection will become paramount in the payment industry's development. With the massive increase in payment data and the growing complexity of cyber-attack methods, both consumers and enterprises are more focused on payment security than ever before. Future payment technologies must incorporate high-strength encryption algorithms and multiple protection mechanisms to ensure every transaction is secure and worry-free.
Finally, the integration of payment and financial services will become even closer. Payment will no longer be merely a channel for fund transfers but will carry more diversified financial service functions such as wealth management, credit, insurance, etc., to provide users with a one-stop financial service experience.
At this critical juncture, Cobo has emerged prominently. It leverages technological encapsulation methods to integrate the complex underlying architecture of blockchain with the operational logic of stablecoins, transforming it into standardized modules that are easy to access.
This initiative allows payment companies to avoid the thorny path of technological R&D, requiring no significant investment of effort in researching underlying technologies. They can quickly introduce cutting-edge payment solutions simply by connecting to the interfaces provided by Cobo, greatly reducing the difficulty of entering emerging payment sectors.
At the same time, in response to the tightening global regulatory landscape, Cobo has formed a professional legal and compliance team to thoroughly study the regulatory policy differences in various countries, customizing compliant pathways for partner enterprises to help them avoid policy risks and successfully dismantle the dual barriers of technology and compliance, facilitating a smooth transition for traditional payment institutions to digital and intelligent payment models.
Whether Web3 technology can reshape the existing payment landscape, we will wait and see.