Implementing Blockchain for Secure and Efficient Cross-Border Payment Systems

Aumbur Kwaghter Sule, Nsisong Louis Eyo-Udo, Ekene Cynthia Onukwulu, Mercy Odochi Agho and Chima Azubuike
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Aumbur Kwaghter Sule: Independent Researcher, Abuja, Nigeria
Nsisong Louis Eyo-Udo: Independent Researcher, Lagos Nigeria
Ekene Cynthia Onukwulu: Kent Business School, University of Kent, UK
Mercy Odochi Agho: Independent Researcher, Portharcourt Nigeria
Chima Azubuike: Guaranty Trust Bank (Nigeria) Limited

International Journal of Research and Innovation in Applied Science, 2024, vol. 9, issue 12, 508-535

Abstract: The global financial ecosystem has long been hindered by inefficiencies, high costs, and security concerns in cross-border payment systems. Blockchain technology has emerged as a promising solution to address these challenges, offering enhanced security, transparency, and operational efficiency. This paper explores the potential of blockchain for transforming cross-border payment systems, focusing on its role in improving transaction speed, reducing costs, and ensuring the integrity of data. Blockchain’s decentralized nature eliminates intermediaries, reducing transaction times from days to minutes, which is particularly crucial for international money transfers. One of the key advantages of blockchain in cross-border payments is its ability to provide a transparent and immutable ledger, ensuring the traceability of transactions. This enhances security by making fraud and errors less likely, as all records are permanently stored in a distributed ledger accessible by all parties involved. Smart contracts, another feature of blockchain, enable automatic execution of predefined agreements, reducing the need for manual intervention and streamlining operations. Furthermore, blockchain facilitates the integration of digital currencies and stablecoins, providing an alternative to traditional currency exchange methods and minimizing the risks associated with fluctuating exchange rates. By utilizing cryptocurrencies or digital tokens, blockchain-based systems can reduce the dependence on correspondent banks, thereby minimizing transaction fees and delays. Despite its numerous advantages, there are challenges to blockchain adoption in cross-border payments, including regulatory compliance, scalability, and integration with existing financial infrastructure. However, ongoing advancements in blockchain protocols and regulatory frameworks are progressively overcoming these barriers, paving the way for broader implementation. This paper examines real-world case studies of blockchain applications in cross-border payments, demonstrating its impact on financial inclusion and international trade. The findings suggest that blockchain has the potential to revolutionize the global payment system by making cross-border transactions more secure, efficient, and cost-effective.

Date: 2024
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