Bitcoin Payment Speed Used to be a Huge Driving Force but Traditional Systems are Improving Too
When bitcoin appeared on the market, it seemed to threaten traditional payment systems such as Western Union, SWIFT, and banks. To stay relevant, such entities needed to improve the speed of their payments.
And that is exactly what they have done. SWIFT demonstrated this October that bank payments from China to Australia could be made in under twenty seconds. SWIFT’s membership in the Society for Worldwide Interbank Financial Telecommunications, which is a network that connects banks together, may facilitate the rapid payments. Another company, called Transferwise, is able to complete the same types of payments in fifteen seconds.
If such companies are working to repair the issues associated with traditional payments, then the question that arises is where bitcoin stands.
Interestingly enough, possibly in a good position. Even though SWIFT and other companies are working to speed up payments, there are still issues. For instance, central banks process payments through a retail payment system. The payments are batched together and are issued in one day and then, they are settled ultimately, within 24 to 48 hours.
Banks are trying to combat the retail payment system’s sluggishness through a new type of system that can process in real time. One such program that they may be implemented is one by Transferwise. The real time retail payments allow banks to continuously provide payments and without additional authorization mechanisms.
There are banking entities that have already implemented such technology. For example, England’s central bank, the Bank of English, adopted a faster payment system in 2008. Other banks, such as Sweden’s BiR, Singapore’s FAST, and Australia’s NPP adopted their own real-time retail payment systems. Other than improving the speed of the payment systems, these entities are also reducing the costs associated with the payment systems as well.
Another outstanding issue that traditional entities find to be the most challenging is serving cross-border payment niche of those who are de-risked – essentially, those who use cash for everything. A few de-risked market users include entities in the marijuana industry and the adult entertainment industry, which sues PayPal due to banks’ refusal to serve them. These types of markets may be bitcoin’s best bet.