Written by Alex Liu, Foresight News
Traditional cross-border payment problems
As the global economy continues to deepen, cross-border payments, as an important link between trade and finance among countries, have become increasingly important. However, the various limitations of traditional payment methods such as ACH network transfers, UnionPay payments, Visa, and Mastercard make it difficult for companies to enjoy efficient and low-cost services.
Cross-border payment processes usually take several days and involve clearing multiple layers of intermediaries, resulting in high fees and inefficiencies. At the same time, due to differences in regulatory requirements in different countries, companies are also increasing their investment in compliance. This not only pushes up operating costs, but also greatly reduces the user experience due to opaque charges and lengthy processes.
These issues have led enterprises and individuals to anticipate more real-time and low-cost payment methods. The rise of stablecoins is precisely the solution under this background.
Stablecoins combine the advantages of blockchain technology with the value stability of fiat currencies, eliminating 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 enhances the speed of capital flow. Additionally, regardless of where users are located, as long as they have a blockchain wallet, they can complete transactions. This efficient and accessible characteristic has led to the rapid proliferation of stablecoins in the global payment field.
In 2023, stablecoin payment transaction volume exceeds $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. Take Bridge as an example; this company focuses on helping businesses accept and use stablecoin payments. By providing API interfaces, it enables seamless conversion between fiat and stablecoins, supporting businesses in conducting cross-border payments and exchanges based on stablecoins globally, and even assisting companies in issuing customized stablecoins. Its services not only significantly reduce payment time and costs but also allow businesses to operate flexibly between 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, prompting more payment companies to begin focusing on and attempting to enter this area.
However, traditional payment companies face significant challenges when attempting to integrate stablecoin payments. The threshold of blockchain technology, the complexity of compliance adaptation, and the demands for risk control capabilities have become the three major challenges on the path of transformation for 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 high investments.
Cobo cross-border payment solution process
Simplified technology development: making innovation accessible
Cobo's cross-border payment solution offers a full-chain functionality from cryptocurrency collection, wallet management, compliance and risk control, on-chain capital processing, asset management to fiat currency conversion, fully meeting the diverse needs of payment companies, with high flexibility in its solutions, allowing on-demand access and usage.
Core functional modules
Acquisition:
Supports full custody and MPC, providing payment companies with diverse wallet management model choices, whether they prefer the highly secure centralized management of full custody or the MPC model with a certain degree of autonomy, ensuring the safety and flexible allocation of funds.
Supports automatic aggregation of funds, greatly simplifying the fund management process, improving the efficiency of fund utilization, avoiding cumbersome manual operations, and making fund management more intelligent and convenient.
Equipped with powerful compliance and risk control functions, it has an advanced AML system and comprehensive compliance solutions built in, monitors transaction risks in real-time, ensures that every transaction is legal and compliant, and effectively prevents various risk events, safeguarding the stable development of payment customers' businesses.
Clearing: integrating a rich array of capital processing tools to help payment companies efficiently complete on-chain capital processing. For instance, providing convenient exchange services to meet the conversion needs between different currencies; supporting cross-chain switching to adapt to diverse blockchain ecosystems; and offering wealth management functions to help clients enhance the returns on idle funds, optimizing liquidity and value-added capabilities comprehensively.
Settlement: integrating multiple compliant OTC service providers and supporting crypto-friendly bank account openings, facilitating the conversion channel from Crypto to fiat, ensuring the smoothness and legality of capital flow, providing payment companies with a complete capital settlement solution, enabling them to easily address the challenges of fiat conversions and settlements in cross-border payments.
Moreover, considering the relatively high threshold for traditional payment institutions to use and understand blockchain, Cobo has carefully designed a series of features that effectively shield the complexity of blockchain technology.
For example, it supports automatic aggregation features, eliminating the need for customers to worry about complex aggregation operations; stablecoins cover Gas fees, alleviating customers' financial accounting burdens; one-stop KYC services simplify the customer identity verification process, comprehensively lowering the barriers and friction of using blockchain, allowing payment customers to focus more on the expansion and innovation of their core business without being troubled by the complexity of blockchain technology.
In addition, Cobo plans to introduce more automation features, such as supporting users in setting up payment workflows to automate payment processes, thereby further enhancing the customer experience and business efficiency, continuously creating value for customers.
Cobo provides one-stop resource docking services to help payment companies streamline the entire process of cross-border payments. By integrating multiple compliant payment platforms and supporting the quick establishment of bank accounts, Cobo not only optimizes the capital clearing path but also significantly reduces the operational complexity for enterprises and improves overall operational efficiency.
Compliance and risk control: the sword of Damocles in the payment field
Another significant challenge payment companies face in cross-border payments is compliance and risk control issues.
Different countries and regions have varying regulatory policies for blockchain payments, ranging from customer identity verification (KYC) to anti-money laundering (AML) to transaction monitoring (KYT) and data privacy protection. Companies need to meet multiple requirements.
In response to traditional payment concerns regarding blockchain-related regulations, Cobo has incorporated a complete compliance system into its solutions.
Specifically, Cobo's compliance solutions provide automated risk analysis tools and collaborate with several globally leading compliance service providers to offer real-time policy updates and recommendations to enterprises. Its built-in AML system can analyze the risk status of every on-chain transaction in real-time, using intelligent algorithms to identify high-risk addresses and timely block suspicious transactions. This comprehensive risk management capability allows enterprises to easily respond to regulatory requirements in different regions globally.
Additionally, Cobo provides wallet services in dual modes of HSM full custody and MPC co-management, meeting enterprises' compliance needs in different markets. In full custody mode, based on Cobo's centralized custody wallet, businesses can complete payment operations and asset management within a compliant framework, significantly simplifying processes and improving 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 protection. In summary, full custody is highly efficient and secure, while MPC's advantage lies in enterprises' ability to flexibly control and manage.
Value-added services and ecosystem co-construction
In addition to providing payment functions, Cobo also designs a series of value-added services for enterprises. For example, to address corporate liquidity needs, Cobo launched a stablecoin wealth management module to help businesses invest idle funds into low-risk on-chain investment tools, thereby improving fund utilization efficiency. Additionally, Cobo provides tailored technical and risk control solutions based on the specific business scenarios of customers, ensuring that each enterprise can succeed in its target market.
The actual effectiveness of the Cobo solution has been fully validated by the market. For example, a payment company completed the integration of its digital currency wallet with its own system in just two weeks through this solution, successfully realizing the first cross-border stablecoin payment 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 one-stop technical support for various businesses and institutions through an open architecture, helping them quickly integrate into the global digital payment network. In addition, Cobo allows partners to deeply integrate their products with its platform, creating synergistic effects and achieving value sharing. The service targets and partners include cross-border payment institutions, acquiring institutions, compliant OTCs, stablecoin issuers, card merchants, and more.
Conclusion: Now is the time for Web3 payments
Currently, the development trend of the global payment industry is becoming increasingly clear.
First, the demand for cross-border payments will continue to experience explosive growth. With the accelerating process of global economic integration, international trade, cross-border e-commerce, overseas investment, and tourism and study abroad are flourishing, leading to higher demands for convenience, timeliness, and cost-effectiveness in cross-border payments.
Secondly, digital payments will thoroughly penetrate every subtle corner of social and economic life. Whether in high-end shopping centers in bustling cities or small shops in remote villages, or even mobile vendors on the streets, digital payment methods will become standard, further compressing the usage scenarios for cash payments.
Moreover, safety and privacy protection will become a top priority in the payment industry. With the massive growth of payment data and the increasingly complex means of cyberattacks, consumers and businesses are paying unprecedented attention to payment security. Future payment technologies must incorporate high-strength encryption algorithms and multiple protection mechanisms to ensure the security of every transaction.
Finally, the integration of payment and financial services will become closer, with payments no longer just being a channel for the transfer of funds but also carrying more diverse financial service functions such as wealth management, credit, and insurance, creating a one-stop financial service experience for users.
At this critical juncture, Cobo stands out. It integrates the complex underlying architecture of blockchain and the operational logic of stablecoins into standardized modules that are easy to access.
This initiative allows payment companies to avoid the thorny path of technology development, requiring no substantial effort to delve into underlying technologies; by simply connecting to the interfaces provided by Cobo, they can quickly introduce cutting-edge payment solutions, significantly reducing the difficulty of entering the emerging payment field.
At the same time, in the face of increasingly stringent global regulations, Cobo has assembled a professional legal and compliance team to deeply study the differences in laws and regulations in various countries and regions, customizing compliant pathways for partner companies to help them avoid policy risks and successfully dismantle the dual barriers of technology and compliance, aiding traditional payment institutions in smoothly transitioning to digital and intelligent payment models.
Whether Web3 technology can reshape the existing payment landscape, we will see.