Alternative payments applications of blockchain technology

According to Deloitte’s 2019 global blockchain survey, 83 percent of market participants see strong use cases for blockchain technology in the industry today.

Though a majority of respondents also called it a top-five priority for development, just 23 percent have implemented a deployment. The report highlights that the sectors which could boost blockchain acceptance, and where it could have the most impact, can be found in trade finance, invoicing and insurance.

While the applications of blockchain and distributed ledger technology within the payments space may take up headlines for evangelists and developers, these are sectors of the market which may stand to gain the most benefits from the implementation of this new technology.


When employees live in the same country as their employer, the process of payment is fairly straightforward. Things become more complex when a firm needs to make cross-border payments for those working abroad.

Additional wait times when money moves between the banking systems of the world can frustrate freelancers, while interchange fees see banks adding additional charges for exchanging across currencies. Due to this complexity, most firms employ a third-party company to handle their international payments.

A blockchain-based system would mean that money would move faster between the employer and payee. There would be no need for a middle man or third-party firm to make sure the payment arrives on time, cutting costs and reducing the speed of the payment. Cross-border transactions also become less volatile – hourly exchange rate changes can be taken advantage of by intermediaries.

Fewer parties involved in the chain, plus the transparency of a ledger means that those on both sides of the transaction will know exactly where the payment is at all times. On top of that, due to the immutable and encrypted nature of a blockchain system, it is extremely difficult to falsify information.

Difficulties come in the creation of the blockchain itself. Not many companies would likely want their transactions publicly visible. The creation of a private, permissioned blockchain removes that concern but places the update and validation of the chain in the hands of a few individuals. These people can become single points of failure for the entire chain, and an easy target for hackers.


Treasurers are always looking for new and more efficient ways of providing cash management with fresh information on positions and forecasts with an aim to gain greater insight into their company’s working capital needs. This need is driving an increased spend on innovative technology and new solutions by corporate treasurers.

There are several ways that blockchain technology can impact the corporate treasury sector. Blockchain has the potential to allow greater control over treasury workflows and a real-time of a firm’s liquidity position, and could enabled treasurers to access balances across geographies, entities and departments without having to rely on batch-based statements.

The reconciliation process could be shortened by the application of smart contracts, which will be able to eliminate the need for third-party transactions and confirmations. Similarly, the settlement cycle will be reduced through the removal of intermediaries, limiting risk, costs and problems around documentation.

The transparency of a blockchain system would also allow the corporate treasurer improved auditability, and ability to show real-time ownership of underlying cash. Intra-company loans would be auditable by time-stamping reference FX rates.

Despite these potential benefits, an October 2018 survey from the Association for Financial Professionals found that only 6 percent of treasurers utilize blockchain or distributed ledger technology and 79 percent have no plans to do so.

Trade finance & supply chain management

The trade financing industry and the supply chains that underpin it are hundreds of years old but have not seen much technological growth in recent times. Digitisation of trade finance has been slowed by the fact that a large number of variables come into play when communicating information cross-border which create large amounts of documentation.

Company A in the Unites States wants to import goods from Supplier B in China. The importer needs to pay for the goods, but is hesitant to do so before knowing whether the goods have arrived as ordered. The exporter may also be wary about shipping the goods without knowing that the payment will arrive on time. Banks will issue letters of credit to ensure promising to pay once certain documents (like bills of lading) have been provded by the exporter to show the goods are on their way.

The interaction between importer, exporter, importer’s bank and exporter’s bank, let alone additional input from local shippers, insurers and more, creates a pileup of paperwork. Effots on digitisation have so far focused on payments and information, usually by scanned PDF documents. The transparent nature of blockchain has raised hopes for the automation of the process.

With a blockchain-based system, each participant in the network will be updated on the most recent transaction in the chain. Due to the immutable nature of blockchain there would be no need for multiple copies of the same document.

Several concept ideas have been created in the past few years. In September 2016, Barclays and fintech startup Wave reported the first live blockchain-based trade finance deal. According to Barclays, the letter of credit transaction process, which usually takes between seven and 10 days from issuing to approval, could be reduced to less than four hours. The letter of credit itself was issued through the SWIFT.

IBM partnered with Indian company Mahindra and Chinese conglomerate Sichuan Hejia to develop a blockchain-based supply chain financing solution. China-based Dianrong, a leader in online marketplace lending, and FnConn (a Foxconn subsidiary) launched ChainedFinance in March 2017.


Insurers are still investigating the use cases of blockchain technology within the sector’s unique operating structures. Early adopters in insurance started with experiments focused on lowering the operating costs related to transaction processing and improved data accuracy.

The use of smart contracts has seen uptake form insurance firms. In 2017 AXA launched its fizzy platform based around delayed airline flights. It connects to air traffic databases to monitor flight statuses and will trigger payment to a policyholder on the event of a flight delay of two or more hours.

The insurance industry has also seen increased collaboration, as well as internal proof-of-concept experiments. The Blockchain Insurance Industry Initiative (B3i) was incorporated in March 2018. “A platform built on distributed ledger technology can eliminate the duplication of data across applications, systems, and parties,” writes the group.

“Along with the friction generated by duplication and degradation of quality.  DLT provides a “single source of truth”, thus removing the need for traditional data transformation or integrations.”

In July the group released version 1.0 of its Property Catastrophe Excess of Loss Reinsurance product on the Corda blockchain network provided by consortium R3. The system claims to reduce effort in manual activities required to place, renew and manage reinsurance, improve communication for multiple parties on the network, and reduce operational risk through the reduction of double keying.

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