IBM Blockchain Technology Makes Cross-Border Payments Faster
IBM has made its blockchain technology available to process payments in the South Pacific. Using IBM Blockchain in collaboration with Stellar and KlickEx Group, the solution will work to improve the speed at which banks clear and settle payment transactions on a single network nearly in real time.
Stellar’s network is responsible for the issue and exchange of digital assets, with KlickEx serving as the project’s supporting financial institution. Once transactions are cleared, Stellar will provide resources for their final settlement.
According to IBM, the solution is already in use by the Advanced Pacific Financial Infrastructure for Inclusion (APFII), a public-private partnership launched with funding from SWIFT and the United Nations. By early 2018, it’s expected to process six out of 10 cross-border payments in retail foreign exchange corridors in Australia, Fiji, New Zealand, Samoa and Tonga.
“This is the first time anyone has made blockchain work at an institutionally viable scale,” said Robert Bell, chairman of APFII and founder of KlickEx Group, in the official press release. “This project was a natural next step following our work to create seamless and borderless payments across the Pacific,” he went on to say.
The Promise of Blockchain Technology
Originally created to support the exchange of bitcoin and other cryptocurrencies, blockchain technology holds the potential to support worldwide payments in traditional currencies. Because blockchain could eliminate the need for centralized processing, verification and recording of transactions, some experts argue that it could eliminate the need for credit reporting and banking as it’s currently conducted.
This decentralization offers immediate benefits for financial services in remote areas. Blockchain-supported transactions are fast and person-to-person; they don’t have to pass through a financial institution for payment verification. Anyone involved in the transaction can reference the ledger to access data and transactions can’t be tampered with after they’re executed, which enhances trust. In addition, because transaction costs are so low, blockchain makes micropayments much more financially feasible — an advantage that will help to attract new customers in developing economies.
IBM is also talking with leading commercial banks, including TD Bank and WorldCom Finance, to design blockchain-based services. In addition to exploring distributed ledger services for current customers, banks want to extend the availability of financial services into areas too remote for traditional technologies.
TechRepublic reports that IBM has partnered with the London Stock Exchange Group to create a blockchain solution for managing shareholder data. Thanks to blockchain’s transparency, speed and low costs, it could also have implications for private equity management, trade finance, securities lending and foreign exchange payments netting.