JPMorgan Piloting Blockchain-based Payment Solution in Asia
American investment bank and financial services provider JPMorgan, on Monday, April 12, launched ‘Confirm,' a blockchain solution to reduce the number of rejected or returned payments.
‘Confirm' Validates Transactions In ‘Near Real-time'
Following the launch, the US bank is now test-running the blockchain solution with 12 banks in Taiwan. The financial institutions include CTBC Bank, Taiwan Cooperative Bank, and First Commercial Bank.
As part of the test run, the banks were required to transfer money to Indonesia, using JPMorgan's clearing solution – ‘PayDirect.'
Disclosing this development to the investing public, the banks which were used as case studies, according to JPMorgan, were able to request and receive confirmation of beneficiaries' account information in ‘near-real-time.'
According to the US banking giant, there are numerous risks attached to transaction failures in the blockchain market, some of which are -a heightened risk of fraud, increment in cost from payment returns, and poor customer experience because of delays in processing payments.
Why this solution is timely for digital asset holders
In the blockchain industry, transactions are mostly seamless as cryptocurrency transactions are often done without problems. But there are instances where unsuccessful and failed transactions are recorded. In situations where failed transactions occur, one of the most common reasons is ‘fees.'
It is pertinent to note that the fees asset holders input in their transactions is collected by miners, who are shouldered with the responsibility of confirming transactions on the network.
These fees are used to determine the priority of each transaction as far as blockchain is concerned. Meaning that the higher the fee, the higher the level of importance placed on a transaction, and vice-versa. So, if the price an asset holder includes is too low, there are chances that miners will not consider such a transaction worthwhile to validate. And the most common consequence of this is rejection.
While no data is accessible at press time to confirm the rate at which traders experience failure in their transactions, there are indications most of the transactions that suffered rejection were because of the injected fee. More so, when a low price is used during the period that a network is experiencing congestion, there is a likelihood that it will not be successful. Due to how the blockchain is designed, miners are the only ones that determine every transaction's status.
However, with ‘Confirm,' JPMorgan brings a solution aiming to reduce failed transactions and increase successful ones.
Through a secure peer-to-peer network in the blockchain industry, trading entities can request an account's validation before payment initiation. They can also respond to requests for account owner and status or participate as both a requestor and a responder.