Traditionally, businesses have relied on banks, SWIFT transfers and correspondent networks to move their money across international borders. While this well-established system works, it can often take a few days to complete. It can also be quite expensive, especially if you make these types of transfers regularly.
For B2B companies, this delayed process can impact cash flow. On top of that, it can also affect your supplier relationships and even put growth plans on the back burner.
Thankfully, cryptocurrency, and, in particular, stablecoins, are now providing a more attractive alternative. Thanks largely to their blockchain-based settlements, which enable faster and cheaper business payments.
For Australian companies trading globally in a tough market, this shift can be a lifeline. Here’s what you need to know about Stablecoins and how they can benefit your organisation.
Why Are Traditional B2B Payment Rails So Slow?
Whenever you make a cross-border B2B payment, the process involves multiple intermediaries. Indeed, it is not uncommon for a payment to move through several banks before reaching its final destination.
For this reason, settlement typically takes 2 to 5 business days. Sometimes, even more if there are public holidays to contend with, each stage increases the processing time and fees you’ll incur. As a result, it can create uncertainty for finance teams managing international invoice settlement cycles.
On top of this, there are foreign exchange spreads to consider. So much so that FX fee-reduction strategies have become a priority for businesses trading in USD, EUR, and Asian currencies. Largely, this is because their margins shrink when banks and intermediaries apply conversion fees at each stage.
Additionally, working capital suffers when funds are in transit, as they can’t be deployed to inventory, marketing, or expansion. That is why many businesses around the world are now actively exploring payment rail alternatives that deliver speed and cost efficiency for them.
What Are Stablecoins?
A stablecoin is a type of cryptocurrency that is designed to maintain a stable value. It achieves this by pegging its price to a reserve asset. Most commonly, fiat currencies like the U.S. dollar, or commodities like gold.
Unlike volatile assets such as Bitcoin, they allow digital dollar transactions on blockchain networks without the price swings associated with these other cryptocurrencies.
How Do Stablecoins Work in Business Transactions?
When a business sends stablecoins, the transaction is recorded on a blockchain. That ledger is shared across a distributed network, and once confirmed, the payment is settled.
This process enables blockchain-based settlements to take place without the involvement of multiple correspondent banks. As a result, using digital wallets allows companies to bypass high fees, long cross-border settlement times, and weekend cutoffs. In doing so, they receive their funds in minutes.
Australian and international businesses can buy USDT with Independent Reserve to enter a compliant gateway into the stablecoin markets. Once acquired, these assets can be used for anything from cross-border supplier payments and contractor settlements to international trade.
Why Do You Get Lower Costs and Greater FX Efficiency in Cross-Border B2B Payments?
One of the strongest arguments for using stablecoins is that you have better control over your costs. Primarily, that is because each intermediary that is removed from a transaction reduces the potential for you to be hit with additional fees.
In cross-border B2B payments, banks can sometimes apply hefty transfer charges and FX spreads. However, when businesses use digital dollar transactions, these conversion layers can be simplified. Hence, the reason why an increasing number of companies are holding stablecoins pegged to USD. (It allows them to settle invoices without repeated currency exchanges.)
FX fee reduction strategies are far easier to plan, implement, and manage when conversion happens once. Rather than multiple times through correspondent banking chains. Additionally, on-chain transaction fees are generally transparent and visible before they are confirmed.
How Does Stablecoins Affect Corporate Treasury Management?
Stablecoins can have a positive impact on your business’s corporate treasury management in several ways.
A good way to understand how is to think of a company’s treasury team as the people who keep an eye on the business’s money every single day. Their role is to ensure there is enough cash in the coffers to pay staff, suppliers, and bills. All while also planning for the company’s growth. It is a bit like managing your own bank account, just on a much bigger scale.
Stablecoins are increasingly giving treasury teams new tools within that framework. That is because, instead of waiting days for funds to clear through traditional banks, they can use digital dollar transactions to move money quickly between countries.
That speed makes it easier to manage cash flow and keep operations running smoothly. Therefore, when payments settle faster, finance teams get a clearer picture of what is coming in and what is going out.
That helps with budgeting, forecasting and liquidity optimisation in business payments. It also means fewer nasty financial surprises at the end of the month.
What Are The Risks Associated With Stablecoins?
Stablecoins are designed to be stable. But they are not risk-free. One of the main concerns is issuer risk. This is because stablecoins are only as reliable as the company or entity backing them.
You should also be aware of regulatory risk, as rules governing digital assets are still evolving in many countries, including Australia.
Something else to be mindful of is the risk of technology. While Blockchain networks are secure by design, wallets, exchanges, and internal processes must be managed carefully. If they are not, then it can lead to loss of funds. Here’s how you can safeguard your crypto investments.
Is Your Business Ready for Stablecoin-Based B2B Payments?
Only you can determine whether your business is ready to facilitate stablecoin-based B2B payments. However, it is worth doing your due diligence to research whether yours is.
This should, at the very least, involve you analysing your operational, legal, and technical infrastructure to ascertain whether it can securely and compliantly handle digital assets.
