Payment companies aspire to provide efficient, secure, and compliant cross-border payment services using stablecoins, but developing such technology often requires substantial costs and extensive expertise. Cobo’s one-stop cross-border payment stablecoin solution enables payment companies to quickly adopt stablecoin payment capabilities without the need for ground-up development.

Challenges of Traditional Cross-Border Payments

As global economic integration deepens, cross-border payments have become increasingly vital as a link between international trade and finance. However, traditional payment methods such as ACH network transfers, UnionPay, Visa, and Mastercard impose significant limitations, making it difficult for businesses to access efficient and cost-effective services.

Cross-border payment processes often take several days, involving multi-layered intermediary clearing mechanisms, resulting in high fees and inefficiencies. At the same time, varying regulatory requirements across countries are driving up compliance costs for businesses. This not only increases operational expenses but also detracts from user experience due to opaque fees and lengthy procedures.

These challenges have created a growing demand among businesses and individuals for real-time, low-cost payment solutions. Against this backdrop, the rise of stablecoins has emerged as a game-changer.

Stablecoins combine the benefits of blockchain technology with the value stability of fiat currencies, eliminating the cumbersome intermediaries inherent in traditional payment processes through peer-to-peer transactions.

This innovative payment method significantly reduces transaction fees and greatly enhances the speed of fund transfers. Moreover, users can transact from anywhere in the world with nothing more than a blockchain wallet. These characteristics of high efficiency and strong accessibility have driven the rapid adoption of stablecoins in the global payment landscape.

In 2023, stablecoin payment transaction volumes exceeded $10 trillion, Source: Coinbase

The transaction volume of stablecoin payments surpassed $10 trillion in 2023, highlighting the significant market demand for this payment method. Take Bridge as an example—a company focused on enabling businesses to accept and use stablecoin payments. By offering API integration, it allows seamless conversion between fiat currencies and stablecoins, supporting global stablecoin-based cross-border payments, exchanges, and even helping companies issue custom stablecoins. Its services not only drastically reduce payment time and costs but also provide businesses with the flexibility to operate across multiple stablecoins.

Bridge’s success caught the attention of payment giant Stripe, which acquired the company for $1.1 billion. This case underscores the commercial value and growth potential of stablecoins in cross-border payments, prompting more payment companies to explore and enter this space.

However, for traditional payment companies, adopting stablecoin payments is no easy task. The barriers of blockchain technology, the complexity of regulatory compliance, and the demands for robust risk control are three major challenges on their path to transformation.

Cobo Solution: One-Stop Web3 Payment Infrastructure Service

Cobo’s Web3 cross-border payment solution is designed to address these challenges. By encapsulating complex blockchain technology into user-friendly modules, this solution enables payment companies to quickly launch stablecoin payment services without the need for substantial investment.

Cobo cross-border payment solution process

Simplified Technical Development: Making Innovation Within Reach

Cobo’s cross-border payment solution provides a full range of services, from cryptocurrency collection, wallet management, compliance and risk control, on-chain fund processing, asset management, to fiat currency exchange, fully meeting the diverse needs of payment companies. Its high flexibility allows for on-demand integration and usage.

Core Function Modules

Acquiring：

• Supports both full custody and MPC, offering payment companies a variety of wallet management options. Whether they prefer the highly secure centralized management of full custody or the desire for some autonomy with the MPC model, their needs are met, ensuring the security and flexible allocation of funds.
• Supports automatic fund aggregation, greatly simplifying fund management processes, improving fund utilization efficiency, and avoiding cumbersome manual operations, making fund management smarter and more convenient.
• Equipped with robust compliance and risk control features, including an advanced AML system and comprehensive compliance solutions, it monitors transaction risks in real time, ensuring every transaction is legal and compliant, effectively preventing various risk events, and safeguarding the stable development of payment customers’ businesses.

Liquidation: Integrates a variety of fund processing tools to help payment companies efficiently handle on-chain fund processing. For example, it offers convenient exchange services to meet currency conversion needs, supports cross-chain switching to adapt to a diverse blockchain ecosystem, and includes wealth management functions to help customers enhance the returns on idle funds, optimizing the liquidity and appreciation capabilities of funds.

Settlement: Integrates multiple compliant OTC service providers and supports crypto-friendly bank account openings, enabling seamless conversion from crypto to fiat currencies. This ensures smooth and legal fund flow, providing payment companies with a complete settlement solution, allowing them to easily address the challenges of fiat currency conversion and settlement in cross-border payments.

Additionally, considering the relatively high barriers to blockchain usage and understanding for traditional payment institutions, Cobo has designed a series of functions that effectively shield the complexities of blockchain technology.

For example, it supports automatic aggregation, eliminating the need for customers to handle complex aggregation operations; stablecoin payment of Gas fees to reduce customers’ financial accounting burdens; and a one-stop KYC service to simplify customer identity verification processes. These features comprehensively reduce the barriers and friction of using blockchain, allowing payment customers to focus more on expanding and innovating their core businesses, without being burdened by the complexities of blockchain technology.

Furthermore, Cobo plans to introduce more automation features, such as allowing users to set up payment workflows to automatically execute payment processes, further enhancing the user experience and business efficiency, continuously creating value for customers.

Cobo offers a one-stop resource integration service, helping payment companies navigate the entire cross-border payment process. By integrating multiple compliant payment platforms and supporting quick bank account openings, Cobo not only optimizes the fund clearing path but also significantly reduces operational complexity and improves overall operational efficiency.

Compliance and Risk Control: The Sword of Damocles in the Payment Industry

Another major challenge faced by payment companies in cross-border payments is compliance and risk control.

Different countries and regions have varying regulatory policies regarding blockchain payments. From customer identity verification (KYC) to anti-money laundering (AML), transaction monitoring (KYT), and data privacy protection, businesses must meet a wide range of requirements.

Addressing the regulatory concerns in the traditional payment sector related to blockchain, Cobo has incorporated a comprehensive compliance system into its solution.

Specifically, Cobo’s compliance solution offers automated risk analysis tools and collaborates with several global leading compliance service providers to provide businesses with real-time policy updates and advice. Its built-in AML system can analyze the risk status of each on-chain transaction in real time, using smart algorithms to identify high-risk addresses and block suspicious transactions in a timely manner. This comprehensive risk management capability allows businesses to easily navigate the regulatory requirements of different regions worldwide.

Additionally, Cobo offers wallet services in two modes: HSM full custody and MPC co-custody, meeting businesses’ compliance needs in different markets. In full custody mode, businesses can perform payment operations and asset management within a compliant framework based on Cobo’s centralized custody wallet, significantly simplifying processes and improving efficiency. In self-custody mode, Cobo’s multi-party computation (MPC) technology allows businesses to customize risk control rules, enabling flexible asset management and security assurance. In short, full custody provides high efficiency and security, while the advantage of MPC lies in the flexibility it offers businesses to control and manage their assets.

Value-Added Services and Ecosystem Co-Building

In addition to providing payment functions, Cobo has designed a series of value-added services for businesses. For example, to address the liquidity needs of enterprises, Cobo has introduced a stablecoin wealth management module, helping businesses invest idle funds into low-risk on-chain investment tools, thereby improving fund utilization efficiency. Furthermore, Cobo offers customized technology and risk control solutions tailored to the specific business scenarios of its clients, ensuring that each business can succeed in its target market.

The practical effects of the Cobo solution have been fully validated in the market. For example, a payment company integrated its digital currency wallet with its system in just two weeks using the Cobo solution, successfully completing the first cross-border stablecoin transaction, providing strong support for business expansion.

As an open blockchain platform, Cobo not only focuses on developing technical solutions but also strives to build a stable, secure, and compliant payment ecosystem, empowering upstream and downstream ecosystem partners.

Cobo’s cross-border payment solution, through its open architecture, offers one-stop technical support to various businesses and institutions, helping them quickly integrate into the global digital payment network. Additionally, Cobo allows partners to deeply integrate their products with the platform, creating synergies and achieving value-sharing. Service recipients and partners include cross-border payment institutions, acquirers, compliant OTCs, stablecoin issuers, card issuers, and more.

Conclusion: The Time for Web3 Payments is Now

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. As the global economic integration process accelerates, international trade, cross-border e-commerce, overseas investment, and the fields of tourism and education are booming, leading to higher demands for the convenience, timeliness, and cost-effectiveness of cross-border payments.

Second, digital payments will permeate every corner of social and economic life. Whether it’s high-end shopping malls in bustling cities, small convenience stores in remote villages, or mobile vendors on street corners, digital payment methods will become the standard, further shrinking the scenarios for cash payments.

Furthermore, security and privacy protection will become the top priority in the development of the payment industry. With the massive increase in payment data and the growing complexity of cyberattacks, both consumers and businesses are paying unprecedented attention to payment security. Future payment technologies must incorporate strong encryption algorithms and multiple protection mechanisms to ensure the safety of every transaction.

Lastly, the integration of payment and financial services will become closer. Payments will no longer just serve as a channel for fund transfers, but will also carry diverse financial services such as wealth management, credit, and insurance, providing users with a one-stop financial service experience.

At this pivotal moment, Cobo stands out. Leveraging technology encapsulation, it integrates the complex underlying blockchain architecture and stablecoin operating logic into standardized modules that are easy to access.

This move allows payment companies to avoid the thorny road of technical research and development. Without investing significant effort into exploring the underlying technology, they can quickly introduce cutting-edge payment solutions simply by integrating the interfaces provided by Cobo, greatly reducing the difficulty of entering the emerging payment field.

At the same time, in response to the tightening global regulatory environment, Cobo has formed a professional legal and compliance team, deeply studying the regulatory policy differences across countries and regions, and customizing compliance paths for partner businesses. This helps companies avoid policy risks and successfully dismantle the dual barriers of technology and compliance, facilitating the smooth transition of traditional payment institutions to digital and intelligent payment models.

Whether Web3 technology can reshape the current landscape of the payment industry, we will wait and see.

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