Blockchain technology may make credit card payments cheaper and safer.
That’s the aim of a pilot program Visa Europe is launching with BTL Group, an effort billed as “a first-of-its-kind blockchain-based settlement system.”
Hendrik Kleinsmiede, Co-Founder and Innovation Partner, at Visa Europe Collab, wants to test international payments over blockchain technology between a hand-picked series of banks across different countries, to see if credit risk and transfer time can be reduced without compromising security.
“For me the opportunity is a fascinating and potentially very beneficial one,” writes Kleinsmiede. “Through the use of smart contracts and blockchains I believe we can create a fast, compliant and low-cost interbank payment and settlement service, with embedded regional compliance.”
Blockchain is a distributed ledger that keeps copies of every transaction made. One advantage is security – each transaction depends on the previous one. Amending previous entries requires the consent of all participants.
Moving money cross-border can take at least three working days with Swift, and the system has been subject to its own security problems: earlier this year, malware was used to seal $81 million from the Bangladesh Bank through Swift – the hackers were only prevented from stealing more when a spelling mistake in a request prompted Deutsche Bank to investigate.