How Remiit Smart Contracts Will Change The Face of Global Trade Payments – An Inside View

by Ankur Gupta · September 28, 2018

According to a WTO report, Global Trade Finance accounts to over USD 10 trillion very year with banks and financial institutions offering various trade finance products and services such as Letter of Credits, Bank Guarantees, products for hedging risk etc.

Banks earn a large amount of money facilitating international trade and finance, but also face several challenges. For instance, a few years ago, many major banks including the Standard Chartered Bank incurred losses on account of fraud. As most of trade finance is based upon paper based contracts and lacks transparency among all stakeholders, it provides fraudsters to exploit this and secure financing from multiple banks using the same set of invoice and documents as collateral.

While much attention has been focussed on the price and movement of Bitcoins, are a large section of the world remained ignorant to the blockchain revolution which is already underway and is bound to change the way how business manage their payments. It has been almost a decade since the Bitcoin was introduced, and till date, not a single fraudulent transaction involving Bitcoin has been recorded.

The Blockchain technology addresses the existing Trade Finance problems. Using a permissioned Blockchain, all parties can transact and settle based on consensus. Blockchain makes trade life cycle visible to all parties and brings transparency. These transactions can also be made immutable and may help in reducing cost of trades.

Smart contracts were first proposed in 1994 by Nick Szabo, an American computer scientist who invented the virtual currency known as “Bit Gold” in 1998, a decade before the invention of the Bitcoin. A smart contract is a digital contract which is built on the blockchain network which eliminates the required of intermediaries, regulatory and central bodies from negotiations. These are self-executing, requires less time and effort to execute and are a hassle-free form of transaction. Current manual contracts can be replaced by Smart contracts and hosted on blockchain. Smart contracts can contain contractual obligations and settle on its own without any human intervention. These smart contracts can be integrated with the payment gateways and make the trade an automated process.

What is Remiit?

Remiit is a payment and remittance platform that is powered by theblockchain technology. It connects various users and businesses with the help of a trust-based Smart Contract System. The Remiit platform allows scalability of business in the remittance and money-transfer industry by providing consumers with a transparent and economical process along with value stability vide its 2-tier token system.

Various Components of Remiit

The Remiit Smart Contract (RSC)

The Remiit Smart Contract relegates customisable smart contracts which can furnish organisations with the freedom to make coordinated efforts and associations with overseas organisations.

REMIIT Payment Gateway Protocol (RPGP)

The Remiit payment gateway protocol or the RPGP is an interface for payment providers and payment gateways to lead the exchange through REMIIT’s settlement platform. The RPGP empowers payment offers and members in related organisations to investigate opportunities across geological boundaries using the linkage of RSC and open new organisations past the basic settlement administrations.

The members engaged with the RPGP incorporate payment suppliers, Banks, fintechs, business platforms, end-users and corporations.

REMI-REMD 2 Tier Token System

Foreign exchange is an essential element of remittances abroad, but it is vulnerable to price fluctuations bought about due to various micro and macroeconomic reasons. The REMI-REMD, REMIIT’s 2-tier token system acts as a solution to the problem of foreign exchange fluctuations while enabling an internal business ecosystem.

REMIIT’s 2-tier token system ensures the stability of the internal business operations while safeguarding liquidity and expansion of business of remittances along the internal REMD Decentralised Exchange (REX). Further, while it is enabling overseas remittances for firms, the REMIIT platform has the prospect to expand this area of business with the RPGP payment Gateway. REMIIT, further lets payment providers and other stakeholders of the payment and remittances industry to explore overseas business opportunities by linking and partnering over the RSC.

How will the Remiit Smart Contracts Change Global trade payments

Presently, banking systems worldwide rely on SWIFT to make payments and remittances overseas, but the SWIFT has its issues which include slow processing speed and high cost. In the month of July 2018 itself over 4.5 billion messages were shared over SWIFT with an average of over 31 million messages shared on a daily basis.

However, the Remiit aims to eliminate the shortcomings to the SWIFT system using blockchain technology incorporated in its smart contracts, payment gateway protocol and 2-tier token system.

The Remiit smart contract has the capabilities to enable financial settlements overseas without the requirement of an intermediator or a central authority, hereby allowing a streamlined, faster and an economical transfer of funds across borders. The Remiit Payment Gateway Protocol or the RPGP provides a payment gateway or an interface for businesses and users to make payment abroad and also allows players in the payment and remittance industry to explore newer ventures overseas with the help of using the linkage between Remiit Payment Gateway Protocol and the Remiit Smart Contract.

Remiit’s REMD 2 tier token system eliminates the uncertainty and risk involved in overseas remittance on account of foreign currency rate fluctuations using its REMD Decentralised Exchange (REX).

Conclusion

The blockchain technology is set to overhaul and revolutionise the financial systems entirely and also can render national banks as obsolete with the introduction of Remiit’s RSC, RPGP and its 2-tier token system aimed to change international payments and remittance industry as we know it today.