Taken on the Blockchain technology of a payment industry insider

Once a domain of hobbyists, the digital currency has attracted public attention in 2017, thanks to the dramatic increase in the price of a single Bitcoin to almost $ 20,000. But for the payment industry, companies that allow fast, secure, and convenient payments for merchants and consumers, Bitcoin's business has been less compelling. Rather, it is the underlying transmission technology of the digital currency blockchain, which has captured the public's interest and billions of investments.

At the beginning of 2015, when a single Bitcoin exchanged digital hands at around $ 250, about 3 million people worldwide used a virtual currency wallet, according to data from blockchain.info. At that time, the popular conversation in the payments industry around the blockchain revolved around the acceptance of cryptocurrency. Will people flock to Bitcoin ATMs to exchange their money with digital currency? Many payment startups have tried to capture the market demand expected by merchants of the digital currency.

Today, nearly 30 million people use blockchain-based virtual portfolios around the world and the rate of adoption is increasing. But cryptocurrency is not able to replace electronic payment systems such as credit and debit cards and mobile wallets, or even the humble cash note.

The fees for Bitcoin transactions can vary widely based on transaction volumes and settlement time; the average transaction fee peaked at $ 55 in December 2017 and fell as low as $ 0.54, making it difficult for a trader to predict settlement rates and timing. Bitcoin transactions also take a long time to complete because they need to be verified by most of the nodes on the blockchain.

These challenges, in addition to significant scalability and volatility issues, make it unlikely that cryptocurrency replaces electronic payments and / or cash for the average consumer or trader. Therefore, the conversation in the payment technology sector has shifted from the acceptance of cryptocurrency and many of the early start-ups focused on merchant acceptance have disappeared or have changed their business plans.

While digital currencies can not supplant traditional payments, the value of the blockchain for the payments industry goes further fiat currency exchange. Blockchain e distributed master book technology (DLT) as a sophisticated and decentralized transmission path, it is worth for payment technology companies.

Resolution of cross-border payments, rationalization of communication between financial institutions, storage and data protection: these are the investment and exploration areas for payment companies and financial institutions.

In the first half of 2018, blockchain companies raised $ 1.3 billion in venture rounds. But venture capital is not the only source of financing and interest in circulation distributed master book technology. A recent study by PricewaterhouseCoopers (PwC) found that financial services organizations such as banks were the most active in the development of blockchain technology. Companies like Mastercard, Ripple and American Express are noteworthy examples.

Mastercard, a network of credit and debit that acts as "binary" on which many transactions are performed all over the world, has filed blockchain patents that would create blockchain-based B2B transactions, provide additional levels of verification to combat fraud when transactions are made of high value, and facilitate the regulation in real time.

American Express uses blockchain technology to make its loyalty and loyalty programs more efficient and safer. AmEx of distributed master book allows merchants to easily constrain card prizes and promotions to products in their inventory they wish to move.

Ripple uses blockchain technology to send cross-border remittances at a lower cost and with fewer errors compared to some traditional cross-border payment methods. Whether public or permitted, blockchain or DLT, these projects solve key problems, reduce costs and at the same time increase efficiency and offer leaner and safer products to traders and consumers.

We may be years away from the global adoption of a universal digital currency or Bitcoin debit cards, or they may never get widespread acceptance. But for the payment industry, blockchain technology could be an innovative tool for the future.