Blockchain for Payments
Use Cases, Features, Challenges, Costs
Loginet applies 33 years in IT and proficiency in blockchain development to help businesses design and build robust blockchain-based payment solutions.
Blockchain for Payments: The Essence
When used for payments, blockchain can help reduce cross-border remittance costs by 3–17%, handle payment confirmation and processing in seconds rather than days, ensure transparency, security, and full traceability of payment-related data.
Blockchain Payments Market
In 2021, the global blockchain market was estimated at $4.67 billion. It is expected to grow from $7.18 billion in 2022 to $163.83 billion by 2029 at a CAGR of 56.3%. Cross-border payments and settlements are considered the largest blockchain use case segment. According to the IDC Worldwide Blockchain Spending Guide, it accounted for 15.9% of the total blockchain market in 2021.
Juniper Research estimates that the total value of B2B cross-border payments immutably stored on blockchain will exceed $4.4 trillion by 2024 and will account for 11% of the total B2B cross-border payments; up from $171 billion in 2019. The main drivers for the popularity of blockchain-based payment solutions are increasing demand for payment data transparency and traceability, fast, secure, and cost-effective processing of payment transactions with no middlemen.
Juniper Research estimates that the total value of B2B cross-border payments immutably stored on blockchain will exceed $4.4 trillion by 2024 and will account for 11% of the total B2B cross-border payments; up from $171 billion in 2019. The main drivers for the popularity of blockchain-based payment solutions are increasing demand for payment data transparency and traceability, fast, secure, and cost-effective processing of payment transactions with no middlemen.
How Blockchain for Payments Works
A sample architecture
Below, loginet shares a sample architecture of blockchain payment solutions we deliver, describes its key components and payment processing flow:
Payment transactions in the blockchain are initiated by network participants or automatically enforced by smart contracts upon pre-defined events. The requested transaction is broadcast to the peer-to-peer (P2P) network of nodes that validate the transaction based on the pre-defined consensus protocol. Once validated and encrypted with a hash function, blockchain data is stored in timestamped blocks linked in chronological order. The blocks form a distributed ledger that serves as a single source of truth to trace payments-related activities and prove the identity of blockchain users. All network members maintain their own copies of the shared ledger that get auto-updated as new data appears.
Users interact with a blockchain to send, receive, and trace payments using role-specific web and/or mobile applications (e.g., for individuals, businesses, financial services providers).
The blockchain solution can be integrated with a crypto wallet, accounting software, financial data marketplaces, as well as with case-specific systems, such as ecommerce platforms or supply chain management software.
Users interact with a blockchain to send, receive, and trace payments using role-specific web and/or mobile applications (e.g., for individuals, businesses, financial services providers).
The blockchain solution can be integrated with a crypto wallet, accounting software, financial data marketplaces, as well as with case-specific systems, such as ecommerce platforms or supply chain management software.
Main use cases
Domestic payments
Fast and convenient peer-to-peer payments for retail, healthcare, public transportation, entertainment, hospitality, and other industries, including QR-code-based payments for face-to-face environment.
Cross-border payments
Fast and convenient peer-to-peer payments for retail, healthcare, public transportation, entertainment, hospitality, and other industries, including QR-code-based payments for face-to-face environment.
Trade finance
Fast and convenient peer-to-peer payments for retail, healthcare, public transportation, entertainment, hospitality, and other industries, including QR-code-based payments for face-to-face environment.
Tax payments
Fast and convenient peer-to-peer payments for retail, healthcare, public transportation, entertainment, hospitality, and other industries, including QR-code-based payments for face-to-face environment.
Key features
Below, loginet shares a sample architecture of blockchain payment solutions we deliver, describes its key components and payment processing flow:
Real-time payment processing
We design and develop a custom blockchain platform and create a crypto coin from scratch.
Your benefit: You can have a tailored feature set for the blockchain solution, choose the user-defined consensus protocol, and create custom rules for transaction recording.
A full audit trail for payment-related documents
Payment data safety in blockchain is supported by multi-factor authentication, including biometric authentication (e.g., facial or fingerprint recognition), payment data encryption, fraud detection algorithms, and more.
Payments traceability
We design and develop a custom blockchain platform and create a crypto coin from scratch.
Your benefit: You can have a tailored feature set for the blockchain solution, choose the user-defined consensus protocol, and create custom rules for transaction recording.
Automated recordkeeping
Payment data safety in blockchain is supported by multi-factor authentication, including biometric authentication (e.g., facial or fingerprint recognition), payment data encryption, fraud detection algorithms, and more.
Support for multiple currencies
We design and develop a custom blockchain platform and create a crypto coin from scratch.
Your benefit: You can have a tailored feature set for the blockchain solution, choose the user-defined consensus protocol, and create custom rules for transaction recording.
QR-code-based payments
Payment data safety in blockchain is supported by multi-factor authentication, including biometric authentication (e.g., facial or fingerprint recognition), payment data encryption, fraud detection algorithms, and more.
Smart contract-enabled automation
We design and develop a custom blockchain platform and create a crypto coin from scratch.
Your benefit: You can have a tailored feature set for the blockchain solution, choose the user-defined consensus protocol, and create custom rules for transaction recording.
Transaction e-signing
Payment data safety in blockchain is supported by multi-factor authentication, including biometric authentication (e.g., facial or fingerprint recognition), payment data encryption, fraud detection algorithms, and more.
Consensus-based validation of payment data
We design and develop a custom blockchain platform and create a crypto coin from scratch.
Your benefit: You can have a tailored feature set for the blockchain solution, choose the user-defined consensus protocol, and create custom rules for transaction recording.
Hashing
Payment data safety in blockchain is supported by multi-factor authentication, including biometric authentication (e.g., facial or fingerprint recognition), payment data encryption, fraud detection algorithms, and more.
Security
Payment data safety in blockchain is supported by multi-factor authentication, including biometric authentication (e.g., facial or fingerprint recognition), payment data encryption, fraud detection algorithms, and more.
Automated KYC/AML verification
Payment data safety in blockchain is supported by multi-factor authentication, including biometric authentication (e.g., facial or fingerprint recognition), payment data encryption, fraud detection algorithms, and more.
Success Stories of Blockchain for Payments
JPMorgan Chase & Co. drastically reduces transaction processing time and cost
In 2017, Wall Street banking giant JPMorgan Chase & Co., with the participation of Royal Bank of Canada and ANZ, launched Interbank Information Network (IIN), an interbank payment platform powered by blockchain. The platform provides real-time processing of interbank and cross-border payment transactions, streamlines the management of financial documents, maintains an immutable record of all transactional data.
Blockchain and smart-contract-based automation helped JPMorgan Chase & Co. reduce bank transfers processing time from 3 days to 1 hour and decrease the fees for cross-border transactions from 5–30% to 2–3%, which resulted in considerable operational cost savings. Also, the bank got improved accuracy and full visibility of transactions-related financial documents. In 2019, JPMorgan Chase & Co. launched their own digital currency called JPM Coin to facilitate and speed up global payments between its business clients.
Blockchain and smart-contract-based automation helped JPMorgan Chase & Co. reduce bank transfers processing time from 3 days to 1 hour and decrease the fees for cross-border transactions from 5–30% to 2–3%, which resulted in considerable operational cost savings. Also, the bank got improved accuracy and full visibility of transactions-related financial documents. In 2019, JPMorgan Chase & Co. launched their own digital currency called JPM Coin to facilitate and speed up global payments between its business clients.
Consistent collaboration
In 2017, Wall Street banking giant JPMorgan Chase & Co., with the participation of Royal Bank of Canada and ANZ, launched Interbank Information Network (IIN), an interbank payment platform powered by blockchain. The platform provides real-time processing of interbank and cross-border payment transactions, streamlines the management of financial documents, maintains an immutable record of all transactional data.
Blockchain and smart-contract-based automation helped JPMorgan Chase & Co. reduce bank transfers processing time from 3 days to 1 hour and decrease the fees for cross-border transactions from 5–30% to 2–3%, which resulted in considerable operational cost savings. Also, the bank got improved accuracy and full visibility of transactions-related financial documents. In 2019, JPMorgan Chase & Co. launched their own digital currency called JPM Coin to facilitate and speed up global payments between its business clients.
Blockchain and smart-contract-based automation helped JPMorgan Chase & Co. reduce bank transfers processing time from 3 days to 1 hour and decrease the fees for cross-border transactions from 5–30% to 2–3%, which resulted in considerable operational cost savings. Also, the bank got improved accuracy and full visibility of transactions-related financial documents. In 2019, JPMorgan Chase & Co. launched their own digital currency called JPM Coin to facilitate and speed up global payments between its business clients.
Looking to Develop Blockchain for Payments?
Our team can help! We can also assess whether the integration project is worth your time and money and which integration scenario will bring max benefit.
Technology Stack for Blockchain Implementation
Big data
Web
BACK END
FRONT END
Mobile
Big data
Big data
The Challenges of Blockchain for Payments
Below, Loginet lists typical challenges of blockchain payment projects and describes how they can be solved.
Challenge #1: The need for real-time financial market data feeds
Blockchain needs to access up-to-date foreign exchange rates for fiat currencies and cryptocurrencies to accurately settle and record multi-currency payment transactions. Thus, the solution has to seamlessly collect relevant financial market data from off-chain sourc
Challenge #2: Adjustment of smart contracts
Blockchain needs to access up-to-date foreign exchange rates for fiat currencies and cryptocurrencies to accurately settle and record multi-currency payment transactions. Thus, the solution has to seamlessly collect relevant financial market data from off-chain sourc
Challenge #3: Protection of sensitive payment information
Dealing with sensitive payment-related data of businesses and individuals poses strict security requirements for the blockchain-based payment solution. Although blockchain provides robust identity verification and data encryption algorithms, it can be susceptible to certain types of cyberthreats, such as routing attacks, phishing attacks, and code exploitation.
Cost Factors for Blockchain-Based Payment Software
The cost of blockchain payment software development varies greatly depending on:
- Drag-and-drop workflow editor for creating custom workflows.
- Pre-built templates for typical workflows.
- Workflow-related emails and notifications.
- Workflow scheduling.
- Real-time dashboards with workflow status, progress, due dates, etc.
- Workflow analytics (e.g., workflows by type, complexity, average completion time).
- Workflow analytics (e.g., workflows by type, complexity, average completion time).
Blockchain for Payments Consulting and Development by Loginet
Blockchain for payments consulting
- Analyzing your business needs and eliciting requirements for a cryptocurrency.
- Analyzing your business needs and eliciting requirements for a cryptocurrency.
- Suggesting an optimal cryptocurrency type, architecture design and tech stack for the cryptocurrency solution.
- Suitable for apps with simple business logic, e.g., for holiday approval, event registration.
- Suitable for apps with simple business logic, e.g., for holiday approval, event registration.
Blockchain for payments development
- Analyzing your business needs and eliciting requirements for a cryptocurrency.
- Analyzing your business needs and eliciting requirements for a cryptocurrency.
- Suggesting an optimal cryptocurrency type, architecture design and tech stack for the cryptocurrency solution.
- Suitable for apps with simple business logic, e.g., for holiday approval, event registration.
- Suitable for apps with simple business logic, e.g., for holiday approval, event registration.
