JP Morgan and Visa are developing a joint project for a cross-border payment system based on blockchain technology to address the slowness and various problems posed by the traditional banking system. This new service should be operational in ten countries by the end of the year, and in more than thirty others by the end of 2023.
JP Morgan and VISA are jointly developing the blockchain
Financial giants JP Morgan and Visa are teaming up to develop cross-border payments through their private blockchain systems, Liink and B2B Connect respectively.
Liink is a bank payment solution designed for cross-border payments developed on Onyx, the blockchain led by JP Morgan. The latter also allows institutions to share financial information and validate transactions.
Visa B2B Connect is a similar solution also developed on the blockchain, which facilitates payments between institutions across different countries, and which, according to its description, responds to certain problems specific to the traditional banking system:
Visa B2B Connect is an innovative multilateral payment network, providing you with an alternative cross-border solution that can address the unpredictability associated with current correspondent banking processes.
Concretely, Visa B2B Connect will be implemented on Confirm, a product developed on JP Morgan’s Liink network, which provides verification of transactions carried out on the basis of a peer-to-peer system on the blockchain. According to the dedicated site, Confirm can verify more than 2 billion bank accounts from more than 3,500 different financial institutions.
Also, according to the information available, this association should allow about ten countries to carry out banking operations via blockchain technology by the end of the year. Deutsche Bank has signed on as a founding member of Confirm and will be responsible for its global adoption.
The blockchain, answers the problems of banks?
The use of blockchain technology would make it possible to solve certain problems currently encountered by the traditional banking system, most of which pass through the SWIFT interbank messaging system.
According to Forbes, failed payments cost the global economic system as much as $118 billion per year. And according to JP Morgan, this would be overwhelmingly due to incorrect banking information.
Confirm should, a priori, solve this problem by identifying the accounts that will be newly supported on the blockchain and by pre-validating the transactions. According to JP Morgan, this program is expected to improve payment efficiency, prevent fraud attempts and unlock new business opportunities.
Further evidence of blockchain adoption by institutional investors, echoes the recent statement by Ravi Menon, the Chief Executive of the Monetary Authority of Singapore, who recently said that the cross-border payment system, in his state, was “not fit for the 21st century” and “slow, expensive, opaque and inefficient, relying on an archaic network of correspondent banks“.