With competition already high in the arena, the race just got more interesting as American Express, Visa and Mastercard all declare their own interest in implementing a Blockchain-based payments system for a more efficient transnational payment processing mechanism.
It is a specific niche area which is attracting heightened interest amongst the endless applications of the Blockchain concept that are currently in development. Aside from the lucrative nature of that niche, a transnational payments mechanism is a perfect fit for the Blockchain: the benefits over traditional methods include faster, more secure, less expensive and more transparent transactions.
Traditional players, then, are anticipating major disruption with the potential for losing their lucrative markets. Not keen to stand by at the risk of seeing themselves submerged by developments elsewhere, the world’s leading payment processors are getting in on the Blockchain act. We wanted to find out more.
The company has partnered with blockchain start-up Ripple to exploit the Blockchain concept for enacting payments between the US and Santander bank in the UK – however, the scope may expand to other banks in the future.
The payments made by American Express’ business customers on its FX International Payments (FXIP) platform will now be routed through Ripple’s enterprise blockchain network, RippleNet.
According to Marc Gordon, Executive VP and CIO at American Express, “This collaboration with Ripple and Santander represents the next step on our Blockchain journey, evolving the way we move money around the world.”
Visa partnered with blockchain startup Chain in October 2016 to enable its blockchain-based money transfer platform, the Visa B2B Connect platform. The platform is seeking to challenge SWIFT as the dominant network for cross-border money transfers.
The initiative is in pilot stage testing with Commerce Bank in the U.S., Shinhan Bank in South Korea, UnionBank of Philippines and United Overseas Bank in Singapore.
The platform is slated for launch in mid-2018 and will provide financial institutions with a more effective solution for cross-border payments.
Similarly, Mastercard announced a blockchain payments plan in October 2017, and filed a patent application with the US Patent and Trademark Office to build a blockchain-based instantaneous payment method. The payments network operator is aiming specifically to removing middlemen in its overseas remittances.
Future of financial services
As the largest payment networks line up to implement Blockchain-based solutions within the payments processing industry, it is clear that the technology offers a plethora of opportunities for improvement.
Whist the financial services industry has generally been noted for its weariness, if not outright scepticism of the crypto-currency phenomenon, the Blockchain concept itself is being embraced for the obvious advantages that it brings. Unlike most Blockchain solutions, however, the solutions being envisaged by the major banks are not expected generally to be open networks – instead, the banks appear to be seeking to implement Blockchain solutions that remain in the hands of privately managed nodes.
A number of major financial groups – including UBS, Goldman Sachs and Citigroup – have publicly acknowledged the prospective power of blockchain technology and have financed a myriad of research working groups to explore the benefits of the technology.
On the other hand, despite evidence of a growing embrace of the Blockchain concept, there is little sign at this stage that any major bank is willing to serve up a more general fiat/crypto-currency interface solution that would likely result in mass adoption for crypto-currencies more generally.
Libertarians and traditionalists continue vying with each other, then, for their respective future visions of finance whose general direction still remains unclear.