A desire for faster payment processing and better audit trails is leading companies away from traditional payment systems and toward innovation – with blockchain reshaping payment processing changes.
- Global Payout (OTC:GOHE) which applies blockchain to improve payment processing and logistics in the financial sector
- Mastercard (NYSE:MA), already one of the biggest players in payment processing which has an expanding portfolio of blockchain-related and may develop its own blockchain systems
- Glance Technologies (CSE:GET), which specializes in payment solutions and has partnered with Netcoins Inc. to integrate blockchain-based cryptocurrency payments into its systems.
- Longfin (NASDAQ:LFIN) where payments can now process through blockchain smart contracts for where import and export.
- Discover Financial Services (NYSE:DFS) which has identified blockchain as one of the most important technologies for its future in direct banking and payments.
Blockchain’s relevance to payment processing
Blockchain technology is shaking up the financial sector in many ways. Bitcoin, and other cryptocurrencies have decentralized ledger systems – blockchains – are their cornerstone. The attraction of these, especially Bitcoin, has obliged financial institutions to assess their attitudes to first cryptocurrencies and second to possible non-cryptocurrency uses for distributed ledger technologies. The latter turned out to be a much more interesting proposition.
One result is that analysts at the World Economic Forum predict that 10% of GDP will be stored using some form of blockchain by 2025. This is not based on the rise of cryptocurrencies. It comes from broader adoption of applications using blockchain to support financial processes.
Why? At its most fundamental, blockchain is a distributed ledger, a system of record keeping:
- which may not need a central controller (central controllers are a single point of failure risk)
- where past elements of the record cannot be deleted or amended.
The records exist across a network of users without the need for a central controller. This eliminates (or reduces) vulnerability to fraud. The lack of central processing can improve efficiency. Removing the expense of third parties also removes delays which means financial transactions can execute directly between network participant.
In effect blockchain-based ledgers deliver a different (to the past) processing and transaction recording model which can apply not only to cryptocurrencies but also to interactions between financial enterprises. This explains why banks and technology companies are pursuing the development of blockchain solutions. They hope they wil find a major productivity and/or cost reduction pay-off, as the following (selected) examples will describe.
Founded in 2009, Global Payout has become a contender in blockchain technology solutions for payments. The company’s Consolidated Payment Gateway (CPG) offers various payment options including:
- mobile accounts
- direct bank payment
- prepaid card accounts
- the creation of customized solutions for businesses.
Customers use CPG as a central hub for international payment networks, distributing money to members and employees around the world. In 2017 Global Payout introduced a second platform, the Gobal Reserve Platform (GRP). This manages financial logistics by providing businesses with a customizable platform for their financial transactions. Built around a ‘Global Reserve Administration module’, it connects back-end processing directly to the front-end payment options for individual users. This is achieved securely through a system customized to the needs of an individual corporate client.
Like CPG, GRP offers a range of payment options. Mobile wallets, prepaid credit cards and prepaid debit cards are among the options supported. For ease of use it has integrated payment systems with users’ existing mobile technology. Via the GRP users can manage all manner of financial interactions, including market orders, grants, loans and cross-border payments.
Global Payout has attracted some notoriety – for its support of one particular fast-growing market, one badly under-served by the traditional financial sector – the legal cannabis sector (which most traditional banks will not touch). The result is Global Payout has become an incubator for broader financial technology solutions.
Part II will appear tomorrow, covering Mastercard, Glance Technologies, LongFin and Discover Financial Services together with ‘What does this mean’.