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FinTech builds on blockchain for international mobile payments

Lucas Mearian | Oct. 17, 2017
IBM unveiled a cross-border blockchain payments service with a Polynesian payments system provider designed to improve efficiency and reduce the cost of making global payments for business and consumers.

KlickEx CEO Robert Bell said his company's adoption of the blockchain-based platform will enable a far more scalable and resilient electronic exchange than was previously offered.

KlickEx serves about 80% of households in its Pacific region, and handles 90% to 95% of all electronic payments that are for $200 or less, Bell said.

"We have three times the number of cash in and cash out agents as all the post offices, banks and Western Unions combined across the Pacific," Bell said. "We had one database system that was running everything."

While KlickEx's prior electronic exchange had enabled mobile payments since 2009, the system was limited in scale by the company's own infrastructure; it served about one million users per day across eight countries, Bell said. When not overtaxed, the KlickEx old exchange system was able to clear payments in between 90 and 200 seconds.

Even so, Bell said, a common processing issue was that payments received would often outpace payments issued, forcing the exchange to use batch processing. That caused a delay that could take days; the new system processes payments in seconds.

"In bringing IBM in to mature the technology, we think we're pushing something like 8 million...payments per day capacity, which is a long way up from where we started," Bell said. "So the new real-time system based on blockchain means payment happens immediately, rather than in batch files."

Users of the electronic distributed ledger can also login and see when a money transfer has been accepted or cleared – for example, by a local grocery store or other merchant.

Along with better scaling, the new blockchain-based system is also distributed so that data can be attained and verified for each country is serves, which helps with  regulatory oversight.


Other blockchain FinTech projects

The new blockchain-based cross-border payments system provides a future path for immediate clearing and settlement of other digital assets, such as central bank-issued digital currencies, commodities and securities.

The KlickEx/ project isn't the first of IBM's cross-border blockchain ventures

In June, IBM, AIG and Standard Chartered Bank announced a pilot project to streamline one of the most complex types of policies in the insurance industry – a multinational policy.

The Bank of England is also considering ways it can use blockchain for payments, clearing and settlement.

The computing resources of most blockchains are tremendous, according to Alex Tapscott, CEO and founder of Northwest Passage Ventures, a venture capital firm that invests in blockchain tech firms.

For example, the Bitcoin cryptocurrency blockchain harnesses anywhere between 10 and 100 times as much computing power as all of Google's serving farms put together.


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