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NEWS
Blockchain-based card payments system successfully tested in the UK
Blockchain-based card payment systems may be coming to retail banking in 2017 following a successful trial of such a system in the United Kingdom this week.
The system is based on technology from SETL Development Ltd. in conjunction with Deloitte Touche Tohmatsu Ltd.’s blockchain ID platform and Metro Bank PLC, which provided a connected client account. The contactless blockchain card was tested by 100 employees at Deloitte’s who used the cards to make purchases from merchants equipped with contactless terminals.
The card works by tapping into Deloitte’s Smart Identity blockchain system, with customer data stored by Deloitte then being sent to SETL following certification in the blockchain. SETL then sets up user credentials.
Because the card bypasses the typical merchant gateway used by financial institutions today and offers instant settlement for the retailer, the system has the capacity to process billions of transactions a day with burst speeds in the tens of thousands per second. That compares with existing networks, which can process about 2,000 to 3,000 transactions per second on average with burst rates of about 14,000 transactions per second.
Taking out the middleman with instant settlement also means that the cost of processing payments is reduced. “Instant settlement for the retailer and the possibility of charges being only a fraction of the credit and debit card schemes could prove to be powerful incentives for its adoption,” according to SETL.
Metro Bank Chief Executive Officer Craig Donaldson said in a statement that what the card does is provide choice in a market dominated by the likes of Visa Inc. and Mastercard Inc.
“Retail payments have for too long been dominated by a few players to the detriment of customers,” Donaldson noted. “Given all the potential that blockchain has to offer, we hope that the success of today’s test will play a key role in moving us a step closer to providing a more efficient and flexible service for customers.”
The system, which is subject to appropriate regulatory approval and further testing, could be launched “as early as 2017.”
Image credit: ingnl/Flickr/CC by SA 2.0
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