One of the most brilliant use cases of digital currencies is to make payments between two people or two systems. However, the sudden fluctuations in the price of digital currencies were the main reason why it didn’t make it into the practical scenario. To deal with that stablecoins were brought into the scenario. The advantage of stablecoins over traditional digital currencies is that the price doesn’t fluctuate that much, making it an ideal payment option for daily transactions to pay suppliers.
In this blog post, we’ll learn the complete process of how you can pay suppliers with stablecoins. But instead of directly jumping into the aforementioned topics, we’ll first start with the basics of Stablecoins.
What are Stablecoins?
Stablecoins are a newer digital currency that, unlike other digital currencies, derives its value from an underlying asset. It is a special kind of digital currency that was introduced in the market with the purpose of creating a currency that would maintain an almost stable value through ups and downs. The reason why the value of Stablecoins manages to stay far more stable than normal digital currencies is that their value is tied to a physical asset (in some cases digital assets too), like the US dollar or gold or oil, etc.
Why Should You Pay Suppliers with Stablecoins?
Traditional payment mediums involve lots of challenges especially when the payment has to be made from one country to another. Stablecoins can be used as a medium of transferring payments to suppliers in place of cash to make cross-border payments with much ease. Here are the benefits of paying suppliers in stablecoins.
- Fast settlements: Traditional payment methods, especially bank transfers, sometimes take days to complete the settlement of money into the receiver’s account. In the case of a supplier, if it takes several business days just to get the funds in their hand, the overall business will be slowed down. Instead of traditional payment mediums, if a supplier is paid with stablecoins, the business will be paced up.
- Low fees for transactions: We all are familiar with the transaction fees that the sender needs to pay additionally to initiate a bank transfer, not to mention the different kinds of hidden charges that are invoked in the event of the overall transfer exceeding a certain amount. If you are involved in a business that requires paying the suppliers several times a week, the additional transaction charges may build up to a huge amount. In that case, Stablecoins can be a savior - transferring funds over stablecoins invokes very low transaction fees.
- Safety and transparency: Stablecoins operates on Blockchain which means that the details of each and every transaction made via stablecoins are available for people over the same blockchain network. This helps to increase the transparency of the process. Also, the data of the transactions are non-editable, which means nobody can temper your transaction details which further increases the safety of payments.
- Stability of value: The main reason to choose Stablecoins over any other digital currency is because the price of most stablecoins is not as volatile as traditional digital currencies like Bitcoin, Ethereum, etc.
One of the most popular stablecoins, the USDC, is valued on the basis of the value of a dollar. So, having 1 stablecoin in your digital currency wallet makes it as valuable as a dollar. This is what makes stablecoins a better, wiser, and more convenient way than making supplier payment in cryptocurrency.
Cross-border payments with stablecoins
When it comes to paying suppliers or vendors overseas, cross-border payments have always been a matter of great headache. But not more with stablecoins - here are all the reasons why you can start paying your overseas suppliers with stablecoins.
- No worry about currency conversion or exchange: While paying an overseas merchant, the money needs to be converted to their national or regional currency. But with stablecoins, the digital wallet that you’re using will take care of currency exchange and conversion and convert the fund to the user’s currency seamlessly.
- Fast settlements: Cross-border payments sometimes take several hours to a few days to settle. But, stablecoin payments take just a few minutes (in most cases) to settle money from the payer to the payee’s digital wallet.
- Transcending geo-limits: Stablecoins can be used to send money to suppliers or vendors even in the regions or countries where the baking system is not much evolved. If your supplier has an account in a bank that raises different kinds of problems in case of cross-border payments, you can use stablecoins to get rid of those problems.
How to Pay Vendors in Stablecoins.
To get started with paying your vendors or suppliers in stablecoins, you can get help from the following guide on Stablecoin payment process
- Create a digital wallet account: To deposit your money into your bank account, you need a bank account; just like that, to begin paying your vendors with stablecoin, you need to create an account in a digital wallet app that has support for digital wallets.
- Collect or buy stablecoins: To transfer stablecoins to your vendor, you first need to own them in your wallet. You can collect some stablecoins or purchase your preferred stablecoins from a stablecoin exchange. It is advised to choose a stablecoin that is commonly used to make transactions. Also, you should select a stablecoin that has a stable price in the true sense with good transaction volume. Here’s a list of the most popular stablecoins used in everyday transactions.
- USDT: USDT is the code name for Tether. The value of this stablecoin is closely tied to the value of a USD dollar.
- USDC: USDC or USD coin is another most-used stablecoin that too has its value tied to a USD dollar.
- Make the transaction: After you finish purchasing enough worth of stablecoin to transfer, it’s now the time to finally start the process of the fund transfer. Although the steps written here can vary app by app, it’s a general guide which will be applicable for most of the commonly used apps.
- First enter the value of stablecoin you wish to transfer. Check whether there is a fee for the transaction and proceed accordingly.
- Enter the address of the wallet of the receiver. Double check the wallet address as it’s nearly impossible to retrieve the money if it had gone to the wrong account.
- Enter your password or fingerprint as prompted in the app to start the transferring process.
- Success or failure confirmation: If the complete transaction process is successful, you’re likely to see a success message on your screen and your balance will update within a few minutes. If, by any chance, the transaction gets declined, investigate the reason that caused the transaction to decline.
Conclusion
We hope that this guide on “Stablecoin payments for suppliers” has helped every curious person out there to gain knowledge on stablecoins and its payment process to suppliers. In the end, we’ll sum up by mentioning that Stablecoin B2B transactions are seeing an increase in recent times and the uses will only increase in the future as more people gain experience in using digital currencies.
Frequently Asked Questions:
- How are stablecoins different from traditional digital currencies for paying vendors?
Answer: Stablecoins are quite different from traditional digital currencies if you want to make your payments to a supplier or a vendor. Stablecoins are less volatile, more safe than traditional digital currencies.
- Are stablecoins secure for businesses to transact in?
Answer: Yes, stablecoins are safe and secured which makes them ideal for businesses to transact in. In fact, for some cases, Stable coins are much more transparent to transit than real currencies.
- What do I need to do to use stablecoins for transactions in my business?
Answer: it is quite state forward to start using stablecoins for transactions in your business. All you need to do is to open an account in a trusted digital wallet that supports paying over stablecoin. Then you need to purchase the particular stablecoins in which you are going to make the payments. Now if you have the address of the receiver wallet, you can now initiate the transaction.
- Which table coin should I use for B2B transactions?
Answer: To make B2B transactions you can use the most popular stable coins available out there, for example: Tether (USDT), USD Coin (USDC), etc. altho there are two many options available when it comes to the choice of stablecoins.
- Can I reverse the transaction made with stablecoins?
Answer : Unfortunately you cannot reverse a blockchain-transaction, if it is already made up with stablecoins, that's why always check the receiver's address before you send any huge amount of funds.
If we look at the other side of the coin, this also helps to stop fraud in which fraudsters take the money back after completion of transactions.
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