The blockchain payments race is on. Payments networks American
Express and Visa have partnered with blockchain startups Ripple
and Chain, respectively, to offer corporate clients B2B, crossborder, blockchain-enabled payments. Mastercard announced a similar service in October, though it’s unclear whether the solution is
proprietary or a partnership.
The Amex solution is limited to sending payments from the
U.S. to businesses that bank with Santander in the U.K., but
Amex said it could expand in the future. Amex’s FX International Payments platform has integrated Ripple’s payment network
RippleNet, which will route noncard payments to Santander. The
companies claim transactions will be faster, less expensive and
more transparent than existing methods but will remain just as
secure. “Transfers that used to take days will be completed in
real time, allowing money to move as fast as business today,” said
Ripple CEO Brad Garlinghouse.
Visa B2B Connect, meanwhile, is in pilot with Commerce Bank
in the U.S., Shinhan Bank in South Korea, UnionBank of Philippines and United Overseas Bank in Singapore. Visa similarly
claims faster, more transparent and secure B2B payments between participating banks.
Last month, Mastercard filed a patent application with the U.S
Patent and Trademark Office to build a blockchain-based database to process electronic transactions.
Blockchain’s Emergence into Travel
Travel suppliers like Lufthansa and Innfinity Software Systems
are moving toward blockchain-based distribution platforms.
AirPlus has said it’s examining
blockchain applications for the
business travel payment sector. While they admit to blockchain’s overall benefits—faster,
easier, more secure and less
mostly dismissed the technology’s immediate benefits or value
But with a major payment network like Amex implementing
blockchain in the B2B space, the
race among all payments suppliers
may accelerate. There’s an urgency
among providers to be the first to
implement blockchain technology,
with an inkling that whoever does
will rule travel payments or at least
have an outsize opportunity to
control its transformation.
“I think it’s just around the corner,” said GoldSpring Consulting partner Colleen Black. “The
recent announcement by American Express, as well as the one
Mastercard made on patenting a
blockchain, shows the intention,
commitment and investment into
further developing payment. It’s
a good first step. I see blockchain
as a great way to transfer funds
in a quicker easier, cheaper way,
and I think it will revolutionize
payment. But, again, it’s just the
still is required for plastic cards which
don’t fall under the exemption,” said
Diemer. Some corporate travelers have
either individual pay corporate cards or
even personal cards within the profiles
that TMCs use to make bookings. In such
cases, said Diemer, SCA will be required
in order to complete payment. The same
goes for leisure bookings.
Along those lines, Conferma director
of strategic relationships Paul Raymond
said, “We need to prepare for SCA any-
way, so we are looking to see if there is
a secure, easy way to do this,” he said.
AirPlus is creating a working group of card
companies, global distribution systems,
TMCs and other relevant parties to figure
out a mutual approach to SCA. The group
will meet in Germany for the first time this
month. “The industry needs an industry-
wide solution,” said Diemer. “We should
have one procedure for everyone.”
The best option seems to be trusted
beneficiaries, better known as white-
listing, by which the customer nomi-
nates payees that can bypass SCA.
“Even a white list requires technical de-
velopment,” said Diemer, but unhelpfully
vague wording in the European Com-
mission’s final regulatory text makes it
unclear whether trusted beneficiaries
would be permitted for corporate pay-
ments. “If it’s not allowed, we need to
change procedures. There are various
ways we can think of, all of which are
unhelpful,” Diemer added.
Diemer expects the new SCA require-
ments to drive more European travel
programs toward unequivocally nonconsumer
payment mechanisms like lodge cards. Raymond
predicted that virtual cards, which are tied to a
centrally billed account, will gain the most. “Vir-
tual cards lend themselves more readily to SCA
because they are single transactions which can be
related to an individual,” he said.
The European Parliament and the European Council
of member states must confirm the standards, which
will take around 18 months to become law.
CONTINUED FROM FRONT PAGE
What Is Strong Customer Authentication & How Does It Apply?
Strong customer authentication is an additional form of verification used to complete a payment,
such as a four-digit PIN texted to a cardholder to use to confirm payment. At the beginning of 2017,
the European Banking Authority, under direction from the European Commission, produced draft
standards for how and in what circumstances SCA must be applied to remote electronic payments.
The travel and payment industries argued SCA is incompatible with instruments like lodge cards
that have no one-to-one relationship with an individual person. Card companies also contended that
fraud rates are much lower for corporate payments, making additional authentication unnecessary.
The European Commission responded in May by drafting Article 17, an exemption for “dedicated
corporate payment processes,” but the EBA fought hard to scrap it, arguing that not all corporate
transactions are low risk and that it’s hard to define a “corporate” payment in legal terms.
In the final text, adopted Nov. 27, the commission opted to retain Article 17 but change the wording. The article now begins, “Payment service providers shall be allowed not to apply strong customer authentication, in respect of legal persons initiating electronic payment services through the
use of dedicated payment processes or protocols that are only made available to payers who are not
consumers.” It adds that payment providers must satisfy relevant authorities “that those processes
or protocols guarantee at least equivalent levels of security” as defined in PSD2.
There’s an urgency
to be the first
an inkling that
will rule travel
payments or at
least have an
to control its
Amex & Visa’s Blockchain Tools
for B2B Crossborder Payments