Blockchain may not be the revolutionary payment system that its supporters have done to be, at least not yet.
While blockchain, the technology behind Bitcoin and other cryptocurrencies, has been acclaimed by companies like IBM and Mastercard as a means of moving money faster around the world, not all of them are sold.
For example, TransferWise, a London-based startup that transfers money between more than 70 countries, has not yet seen an advantage in the use of technology.
"We've heard this dream many times from different people, but if you start digging into it, you realize it might look great on paper, but actually, to make use of it, it's really hard," says the last episode. of Fortune "Taavet Hinrikus, co-founder and president of TransferWise" Balancing the ledger. "" We have examined several blockchain technologies, but we have not yet found anything that allows us to do what we do in a cheaper or faster way. "
Part of the problem is that blockchain technology has not yet achieved sufficient adoption among banks to make it more efficient than prevailing payment systems. And since fintech companies find new and less expensive ways to transfer money, the bar that blockchain technology needs to clarify to make it worthwhile to pass has become higher.
TransferWise can transfer money from Australia to the United Kingdom in 15 seconds while charging a commission of 1% or less, while it will take days (and probably cost more) to make the same transaction in a bank, explains Hinrikus . In addition, TransferWise has been profitable for two consecutive years, despite low commissions, he adds.
The company examined Ripple, a startup that uses blockchain technology to facilitate cross-border payments between banks virtually instantaneously, but has not seen a better proposal than the one currently offered by TransferWise, Hinrikus says.
"If all the banks in the world pass through the Ripple network, it would be surprising, yet, how many banks do Ripple use in production today?" It's a very short list, "says Hinrikus. "In this sense we are big supporters of Ripple or anything else … and if any of these have enough adoption, and actually helps us materially to do cheaper and faster things, we would like to, but so far we have not found one. "
His comments echo those of Western Union's CEO, Hikmet Ersek, who he said Fortuna in June, the money transfer company had not seen any benefit from Ripple technology during a six month trial period. Ripple recently signed PNC Bank and Santander, among others, to use its products, but most of its banking customers are in Asia.
For its part, TransferWise has been able to keep costs down by offering its services exclusively online (abandoning the overloading of brick and mortar branches) and using technology to optimize internal processes so that the startup can stay slim. Its key innovation, however, is that it has built its own payment network, allowing it to circumvent the SWIFT system that banks around the world rely on to transfer money to each other. By removing the intermediary, TransferWise can transfer money directly between the bank accounts of its customers.
"This is the only way we can really make things 10 times better than the existing one [options] let's see out there, "says Hinrikus.