Digital Transactions Authoritative, insightful and timely information for payments professionals
International Business Machines Corp. on Monday announced a new service for financial institutions that uses blockchain technology to reduce settlement times and lower transaction costs.
IBM is offering the service with Stellar.org., a Silicon Valley-based non-profit that runs the open-source Stellar blockchain network to bring low-cost financial services to low-income areas, and KlickEx Group, a cross-border payment service for emerging markets that currently operates in eight countries.
Armonk, N.Y.-based IBM said in a news release that the IBM Blockchain platform it and its partners are offering “is intended to improve the speed in which banks both clear and settle payment transactions on a single network in near real time.” The service already is processing transactions in 12 currency corridors across various Pacific Islands and Australia, New Zealand, and the United Kingdom.
“Using a blockchain distributed ledger, all appropriate parties have access and insight into the clearing and settlement of financial transactions,” the release says. “It is designed to augment financial flows worldwide, for all payment types and values, and allows financial institutions to choose the settlement network of their choice for the exchange of central bank-issued digital assets.”
For example, the service could make it possible for a farmer in Samoa using a smart phone to enter into a trade contract with a buyer in Indonesia, according to IBM. “The blockchain would be used to record the terms of the contract, manage trade documentation, allow the farmer to put up collateral, obtain letters of credit, and finalize transaction terms with immediate payment, conducting global trade with transparency and relative ease.”
