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Maximising Transactional Efficiency Through Cryptocurrency

Written by HAYVN Research

 

The luxury travel industry is an ever-evolving field that needs to keep up with the constantly changing and adapting expectations of high-value clients. The transactions that facilitate the travel industry are often time-sensitive and cross-border in nature. These transactions require a payments system that is modern, flexible, secure, fast, has global reach and is subject to regulatory oversight.


This is where cryptocurrency comes in. As benefits increasingly outweigh costs, and global adoption rises, blockchain technology’s many advantages have started to influence the transactions of luxury experiences.


Traditional payment channels have been built on legacy systems that typically depend on multiple intermediaries, each charging fees for their services. Transactions settled on the blockchain however are faster, inexpensive, and avoid the complexities of cross-border payments. In this article, we explore the transactional efficiencies of cryptocurrency payments in the luxury charter industry.


Quicker Transactions and Reduced Fees

Traditional payment systems typically require multiple banks, brokers, and escrow agents, each with differing levels of authentication requirements. These intermediaries charge fees for their services while increasing the time taken to process transactions. The delays are furthered by the fact that the operations of these parties are constrained by business hours, public holidays, and the possibility of internal systems temporarily breaking down.


Furthermore, there is an increased level of currency risk due to customers booking charters from various locations. Utilising volatile currencies for transactions of significant size while multiple intermediaries facilitate their settlement, can lead to significant losses for a consumer.


Visa’s network may be able to handle and authorise approximately 24,000[1] transactions per second, however, the actual settlement of funds on the Visa network, often takes one to two business days. A cryptocurrency transaction, on the other hand, can take minutes or hours to settle. Contrasting modern fintech payment processors, which boast transactional speed but are still tied to the prolonged settlement times of conventional financial networks, blockchain transactions offer an advantage. They achieve settlement at the same time the transaction is processed. This avoids the numerous counterparties, processing fees, and exchange rate volatility.



Enhanced Security and Privacy

The luxury travel sector caters to a clientele that places a high value on privacy and security. Cryptocurrencies offer a significant advantage in this regard due to the immutability of the underlying settlement layer. Immutability enhances blockchain security through its ability to resist data alteration. Each block once added to the chain, cannot be changed due to the cryptographic hash functions that link blocks together. Altering a single block would require recomputing the hashes of all the subsequent blocks, an impractical task due to the immense computational power required, deterring potential attacks. This feature, as well as it being a decentralised ledger, makes it incredibly secure against fraud, hacks, and censorship.


In terms of network security, blockchain transactions have demonstrated superiority over networks such as Visa. While there have been significant crypto-associated hacks in recent years, amounting to nearly $1 billion in damage​s in 2021​, the reported fraud losses on payment card networks worldwide, including Visa, exceeded $32 billion in the same year. However, it is worth noting that cryptocurrency breaches were due to vulnerabilities in DeFi bridges, wallets, and smart contract oversights, never a hack of the underlying network. The increasing security of the Bitcoin network is demonstrated below.


Source: Quandl

Customer Convenience and Future-proof Reputation

Verifying identities and adhering to Know Your Client (KYC) and Anti-Money Laundering (AML) requires various levels of communication between related parties and their differing requirements.


Blockchain systems, coupled with emergent technologies designed to enhance transactional efficiency and security, have resulted in a far more robust payment process. Being a transparent digital ledger, blockchain analysis companies such as Chainanalysis and Merkle offer streamlined KYC and AML checks. This simplifies the tracking and flagging of suspicious transactions, making it easier for firms to use and share information. This results in a safer and more extensive compliance environment, with greater financial security standards.


The growing number of individuals investing in cryptocurrency has also resulted in a sizable and increasing sector not wishing to incur additional exchange fees and off-ramp costs to convert their cryptocurrency to fiat in order to make a purchase. Accepting cryptocurrency expands the potential client base a business may capture.


Additionally, as payment technology becomes progressively decentralised, a greater number of established companies are entering the space. Given that companies such as Paypal, Visa, Mastercard and Square are among the many that have announced cryptocurrency products, it is becoming increasingly likely that the future of payments is blockchain-based.


Businesses that hesitate on the side of conservatism may soon be seen as companies offering legacy technology while losing market share to the early movers.


Compliance and Regulation

Regulation and compliance are of particular importance in the cryptocurrency industry, where regulation has, at times, lagged innovation. Operating in jurisdictions with unambiguous regulations allows for institutional levels of customer protection.


HAYVN Pay is HAYVN’s regulated and compliant cryptocurrency payment solution, enabling businesses, corporates, and institutions worldwide to authorise, clear, and settle cryptocurrency payments. HAYVN follows uncompromising compliance principles, facilitating cryptocurrency payments and providing the option to receive payments in traditional fiat currency, thus avoiding cryptocurrency’s volatility.


HAYVN is a digital asset-focused financial institution regulated in Australia, Abu Dhabi, Lithuania, the Cayman Islands, and the British Virgin Islands (BVI). Being a technology and regulation-led financial institution, HAYVN allows its customers to leverage blockchain technology, providing access to a complete institutional offering while mitigating potential risks and ensuring compliance with regulatory provisions across multiple jurisdictions.


Closing Thoughts

Luxury flight bookings and confirmations are often made last minute and clients are globally based and widely distributed. This, coupled with the global and distributed nature of the client base, makes cryptocurrency payments a viable method for the settling of transactions.

image of Cessna Citation Latitude

Cryptocurrency payments offer transformative advantages to the luxury charter industry, particularly for transaction efficiency and security. Cryptocurrencies expedite the settlement process, reduce costs, enhance privacy, and present a future-proof payment solution.


As cryptocurrencies gain broader acceptance, both the customer base and the businesses ready to embrace them expand. Operating in clear regulatory frameworks, risks are minimised and customer protection maximised, presenting a forward-thinking payment alternative.


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