A new blockchain-based cross-border payments solution developed by IBM in partnership with the Stellar Development Foundation and KlickEx Group is set to significantly reduce transactions costs and increase transaction speeds for both businesses and consumers.
The solution aims to eliminate the inefficiencies in current cross-border payment systems, including high fees, slow processing, error-prone transactions, and inefficient capital utilization.
It uses Stellar’s technology as its core backbone to enable frictionless cross-border payment transactions, and is already processing live transactions in 12 currency corridors across the Pacific Islands and Australia, New Zealand and the UK.
IBM has convened an initial group of banks as part of the development and deployment process including Banco Bilbao Vizcaya Argentaria (BBVA), Bank Mandiri, the largest bank in Indonesia, Kasikornbank Thailand, Mizuho Financial Group, National Australia Bank, TD Bank, and other financial institutions.
Commenting on the announcement, Jed McCaleb, co-founder of Stellar, said the new innovation and collaboration represented a significant milestone for Stellar as well as the fintech industry as whole.
Stellar is an open-source protocol for exchanging money founded in early 2014 by McCaleb, who also founded Mt. Gox and Ripple, and Joyce Kim, a venture capitalist and entrepreneur.
Several non-profit organizations and businesses are implementing Stellar, particularly in the developing world. The Praekelt Foundation, for instance, integrated Stellar into Vumi, its open-source messaging app, to let young girls in Sub-Saharan Africa save money in airtime credits.
Parkway, a licensed mobile money operator, uses the Stellar network to connect Nigeria’s five major telcos, enabling customers of different mobile money services to send money to one another.
In December 2016 more partnerships were announced, including in the Philippines, India and West Africa.
“Currently, cross-border payments tend to take up to several days to clear,” said McCaleb.
“This new implementation is poised to start a profound change in the South Pacific nations, and once fully scaled by IBM and its banking partners, it could potentially change the way money is moved around the world, helping to improve existing international transactions and advancing financial inclusion in developing nations.”
The solution is run from the IBM Blockchain Platform on Hyperledger Fabric. Digital assets are issued on the Stellar network as a foreign exchange bridge to allow for near real time settlement. KlickEx Group, a New Zealander company providing foreign exchange services, serves as the founding financial institution for the region, servicing banks, retail clients and consumers using this new network.
Each payment is immutable once recorded, and settlement instructions are provided via smart contracts on Hyperledger Fabric. All appropriate parties have access and insight into the clearing and settlement of financial transactions.
The network is currently in use by the Advanced Pacific Financial Infrastructure for Inclusion (APFII) members, a public-private partnership initially funded by the United Nations and SWIFT.
Robert Bell, chairman of APFII and founder of KlickEx Group, said:
“This is the first time anyone has made blockchain work at an institutionally viable scale. 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.”
IBM said it will continue to advance the solution with the goal of expanding capabilities to support central bank-issued digital currencies, securities, bonds and structured financial assets.
https://coinjournal.net/ibm-stellar-klickex-group-develop-blockchain-based-global-payments-solution/
