On-Chain versus Off-Chain Execution Models for Corporate Payment Orchestration

Abstract

Corporate payment orchestration has traditionally relied on off-chain middleware systems to coordinate approvals, settlements, and exception handling across ERP platforms and banking networks. However, the emergence of blockchain-based execution frameworks introduces an alternative model that offers cryptographic finality, tamper-resistant audit trails, and external verifiability through on-chain state commitments. This article presents a comparative evaluation of on-chain versus off-chain execution models for corporate payment flows, analyzing differences in settlement finality enforcement, latency behavior, reconciliation dynamics, and audit assurance strength. Through state transition mapping and batch-size latency profiling, we demonstrate that while on-chain execution enhances transparency and non-repudiation, it incurs higher processing overhead than off-chain orchestration. We propose a hybrid deployment strategy in which operational workflows remain off-chain for efficiency, while finalized payment states are periodically anchored on-chain to ensure regulatory-grade integrity. This balanced architecture maintains performance while enabling trustless verification and improved compliance readiness.