- SAP Managed Tags
Today’s digitization efforts in B2B payments improve the integration and automation between enterprise and financial service providers but do not fundamentally alter the way money moves. Since ages moving money from one party to another means debiting one party’s bank account while crediting the other party’s bank account potentially at a different bank in a different country involving clearing houses or correspondent banks in the case of cross-border transfers. Especially cross-border transfers are painful: expensive - up to 50 USD per transaction and slow - up to 7 days to transmit the money. Oliver Wyman and JP Morgan estimate global costs of cross-border payments of US$100bn as part of their report[1] on deposit tokens.
Rather than digitizing solely the payment process, digitizing money itself and moving payments to a new rail based on distributed ledger technology has the potential to cut these costs by 80% according to the same report.
Today SAP is introducing SAP Digital Currency Hub as an early adoption release enabling payments without boundaries – making payments near instant, available 24/7 globally and secure at low fees. SAP Digital Currency Hub enables customers making and receiving payments with stablecoins, one form of digitized money being represented as tokens on a public blockchain.
Fig. 1: Overview SAP Digital Currency Hub
Fiat-backed stablecoins are pegged 1:1 to an underlying FIAT currency and collateralized against cash holdings or short team government securities thus avoiding any fluctuations.
As a first customer PayPal has paid invoices to EY with the PYUSD stablecoin from its core SAP ERP system utilizing SAP Digital Currency Hub.
To use this new payment rail, buyer and supplier need to establish a payment agreement specifying the stablecoin and blockchain used for settlement. SAP Digital Currency Hub currently supports PYUSD on the Ethereum and USDC on the Ethereum and Polygon blockchain. Once the payment agreement is established, invoices are picked-up during the payment run and rather than sending the payment information to a bank it is sent to SAP Digital Currency Hub for execution. Subsequently, SAP Digital Currency Hub either creates and signs a blockchain transaction if customer wish to control their digital currency holdings themselves (self-custody) or interfaces to a downstream payment processor (custody approach) for executing the blockchain transaction. Once validated and considered final on the blockchain, SAP Digital Currency Hub creates an account statement that can subsequently be uploaded to the core ERP system to reconcile payables and receivables. With SAP Digital Currency Hub stablecoin payments are as easy as bank transfers but near instant, available 24/7 globally at low fees.
SAP Digital Currency Hub demonstrates SAP’s ability to support any kind of payment process be it via traditional rails or blockchain rails and the first customer payment is proof that stablecoins can today serve as a means of payment.
Experience the future of payments today with digital currencies and check out our website or reach out to us for an in-depth discussion how we can advance your payment processes with stablecoins.
[1] Deposit Tokens, Olivery Wyman and Onyx by JP Morgan (http://jpmorgan.com/onyx/documents/deposit-tokens.pdf)
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