IBM has partnered with blockchain company Stellar.org and payments firm KlickEx Group to develop IBM Blockchain, which will help banks speed up, improve the reliability and lower the cost of processing of cross-border payments, according to an IBM announcement.
IBM Blockchain is already processing live transactions in 12 different areas across the Pacific Islands and Australia, New Zealand and the U.K. The tech allows parties to access financial transactions that could be prone to delays.
Starting early next year, IBM said it plans to invite numerous banks worldwide to join the network and help it expand.
Blockchain ledgering currently may be thought of as a technology having more impact in the financial sector, though notably in retail, Walmart has worked with IBM and others to support use of blockchain for tracing accountability in complex food supply transaction for their international grocery efforts.
To be clear, the use of blockchain in retail is still pretty limited. But, IBM has done a lot with the technology and certainly has the scale and product capabilities to extend it to a variety of industries. A platform enabling a hyperledger fabric — core to blockchain — in the form of a network that can settle complex cross-border transactions in a matter of seconds is of enormous immediate benefit to banks, and those forms are the initial focus of this announcement.
However, technology like this also has implications for the buyers and sellers on the sending and receiving ends of these transactions. The percentage of U.S. retail e-commerce sales resulting from cross-border purchases is growing. Merchants increasingly want to do business across borders, and payment companies need to work to enable transaction processes that reduce friction in the purchasing process.
For example, if a consumer makes cross-border purchase from one of the increasing array of international e-commerce marketplaces, but that transaction gets delayed or is incorrectly completed, that shopper probably won't want to tempt fate on that marketplace again.
The current network IBM is running in Asia is a big step toward seeing more of this technology in use. That network, being used by members of the Advanced Pacific Financial Infrastructure for Inclusion, eventually is expected to process up to 60% of all cross-border payments in the South Pacific's retail foreign exchange corridors including Australia, New Zealand, Fiji, Samoa and Tonga by early next year. Its success could go a long way toward determining how soon we see blockchain supporting all kinds of cross-border transactions worldwide.