Blockchain and Crypto
Blockchain technology set to transform cross-border payments, but hurdles remain
- Blockchain technology is set to transform cross-border payments, but regulatory and operational hurdles remain.
- The road to widespread adoption of the use of blockchain for cross-border payments could mirror the history of how Voice over Internet Protocol phone calls became mainstream.

While cryptocurrencies and blockchain technologies are shaking up traditional finance, cross-border payments are still hobbled by regulatory and operational hurdles.
"One of the current weaknesses is the sense of portability and interoperability," said Michael Kleinsteuber, director and global head of cross border payments product development at Citi, speaking at the Consensus 2017 conference Monday in New York. "If you're a business that's thinking about how you're going to integrate this, there's a proliferation of so many different ecosystems, and there isn't a sense of how you're going to participate in the world at large and with all your traditional payments and still have access to what you're developing."
Other incumbents, such as Swift -- the platform that banks use to send and receive information, including on money transfers -- recognize the limitations of using blockchain technologies to send and receive money. Harry Newman, head of EMEA market initiatives at Swift, noted that one factor that's holding off widespread adoption is the lack of bank-backed cryptocurrency.
Global cross-border payments giant Western Union, which services over 200 countries, said regulation is the biggest challenge to be overcome before digital currencies can be considered a mainstay of cross-border payment transactions.
"When bitcoin is a regulated currency and when regulators are willing to accept it, there's no reason we can't add it," said Tim Langley-Hawthorne, senior vice president of technology operations, in an interview with Tearsheet.
But fact is that non-bank "currencies" exist: Just look at Amazon points.
"The future is already here -- we already have non central bank currencies floating around," said Elizabeth Rossiello, co-founder and CEO of BitPesa, a service that lets businesses and individuals worldwide to buy and sell local four African currencies through Bitcoin. "Let's not be fearful to use different tokens for different parts of our life."
Despite the obstacles, major players in the cross-border payments world are preparing for an eventual rollout of blockchain technology for cross-border payments, as shown by Citi's announcement Monday of a blockchain payments initiative in partnership with Nasdaq, and Swift's recent blockchain proof-of-concept pilot, in which a number of major global banks are participating, including ANZ, BNP Paribas, BNY Mellon, DBS Bank, RBC Royal Bank and Wells Fargo. Western Union is also exploring the use of blockchain for internal settlement.
While both startups and incumbents see the eventual transition to a role for blockchain technology, the road to widespread adoption could mirror the history of how being able to make calls online became mainstream.
"In the late 1990s, there was a discussion that VoIP wound't become very prevalent -- you can see that evolution as it became more usable -- today we all have VoIP conversations and it's a heavily-regulated industry," said Sheila James, vice president of operations at online payments provider Veem.