IBM uses blockchain to improve cross-border payments processing

IBM uses blockchain to improve cross-border payments processing

IBM is leading a project that uses public blockchain technology to make international payments in developing countries more efficient and less expensive.

Big Blue is working with KlickEx, a cross-border payments system delivering financial infrastructure for emerging markets, and Stellar, a non-profit building an open source blockchain network for financial services on the new system, which uses IBM DLT technology to provide clearing and settlement of trades on a single network in real time.

Today, making international payments in developing countries can be costly, laborious and error-prone, with transactions in different currencies often requiring multiple intermediaries and taking days or weeks to complete.

The IBM universal payments system is intended to simplify the way funds are exchanged around the world, and to reduce settlement time from days to seconds. Each payment is immutable once recorded, and settlement instructions are provided via smart contracts on Hyperledger Fabric.

National Australia Bank, TD Bank, and other financial institutions are lending their support, by collaborating and advising in the system's development with the intent to help expand its use in other regions around the world, says IBM.

The technology is already in production supporting transactions in 12 currency corridors across the Pacific Islands and Australia, New Zealand and the United Kingdom.

Advanced Pacific Financial Infrastructure for Inclusion (APFII) members, a public-private partnership initially funded by the United Nations and Swift is using the network, vowing to process up to 60% of all cross-border payments in the South Pacific's retail foreign exchange corridors by early next year.

"This is the first time anyone has made blockchain work at an institutionally viable scale,” says Robert Bell, chairman, APFIIp. "Through KlickEx, the Pacific has had relatively low-cost, real-time, multi-currency payments for most of the past decade, and this project was a natural next step following our work to create seamless and borderless payments across the Pacific."

Comments: (3)

Colin Weir
Colin Weir - Moroku - Sydney 16 October, 2017, 10:01Be the first to give this comment the thumbs up 0 likes

This is so yesterday. Bitspark have been doing this for atleast 2 years and Cashaa not far behind .

Robert Bell
Robert Bell - PassportFX - London 16 October, 2017, 14:21Be the first to give this comment the thumbs up 0 likes

I used to think so too, Colin! I have similar stories, about how long klickex has been doing real time, and how much cheaper than blockchain it is...

But you then realise that building for global scale isn't as easy as a press release. Or even getting 100,000 users.

This thing is built for scale. No other blockchain Solution could meet our preformance requirements. This is the first. But this isn't really the major announcement (that we've made a blockchain system work, it connects to most banks in Australia and NZ and the UK in real time,  that it spits ott to 5 countries including 4 mobile network operators, and is already handling nationally significant volumes). 

Robert Bell
Robert Bell - PassportFX - London 16 October, 2017, 14:28Be the first to give this comment the thumbs up 0 likes

(sorry, in a taxi and went through a pothole, causing premature posting!)


The news is that someone made it work, and got IBM, which handles 70% of the world's payments, to deploy it in a region that already had real time payments, and runs without VC money or coin value subsidies, profitablity - where consumers can't afford to pay an extra $1.00 a month to send money home.

That, by implication, means the technology is maturing - and the business case is viable, and it doesn't take VC scales of money to make this work.... And anyone who needs that, is pulling wool over investors eyes.