Secure Digital Payments and Decentralized Finance: A Blockchain-Tethered Microtransaction Engine for Emerging Markets

Abstract

Digital financial inclusion remains a pressing challenge across emerging markets, where traditional banking infrastructure is limited and transaction costs hinder broad economic participation. This paper presents a novel micro transaction engine that leverages blockchain technology and decentralized finance (DeFi) principles to enable secure, low-cost, and real-time digital payments. The system integrates a smart contract-based clearing mechanism with AI-driven fraud detection, ensuring trustless execution and operational resilience. By anchoring off-chain micro transactions to an on-chain settlement ledger, the architecture achieves both scalability and compliance with regional financial regulations. A pilot deployment in an African mobile payment context demonstrates reduced transaction fees by over 70% and a 43% improvement in fraud detection accuracy. These findings position the system as a viable foundation for inclusive and next-generation digital financial ecosystems.