A number of credit card companies are turning to blockchain technology to develop new ways to offer financial services to their partners. Late last year, Mastercard rolled out a permission-based blockchain for application programming interfaces (APIs) called Mastercard Blockchain. Visa, in collaboration with blockchain startup Chain, is piloting its own business-to-business blockchain protocol called B2B Connect. Both of these services allow partners to use the companies’ APIs to create platforms that suit their own needs, whether it’s to streamline supply chains, clear card-based transactions, or facilitate cross-border payments.
Hoping to improve their efforts in international commerce, several banks are already working with Visa on B2B Connect, and now it is reported that five more banks in the Philippines are grouping together to make use of the new technology. CoinDesk reports that the effort—led by the Union Bank of the Philippines (UnionBank)—is designed to help rural banks become more efficient with their payments processes. According to Henry Rhoel Aguda, a senior executive at UnionBank, “We’re co-creating the blockchain platform to be used by the rural banks.” He added that others might be included in the arrangement in the future, and they are ultimately willing to work with as many partners as they can support.
Other institutions around the world making use of B2B Connect include Commerce Bank in the United States, Shinhan Bank in South Korea, and the United Overseas Bank based in Singapore. UnionBank and its partners in the Philippines are just the latest groups considering how blockchain might help them stay competitive in an industry that is increasingly global. This makes decentralized ledgers an attractive asset for financial institutions. Combined with cryptographic security and increased transparency, the possibility of near-instantaneous cross-border transactions may allow rural banks to extend their reach into new markets.
While B2B Connect is still in its trial phase, the service is expected to be launched for commercial use by the middle of this year. In time other companies might develop blockchain-based API services of their own. Until then, the experiences of UnionBank and company will serve as case studies for interested parties and skeptics alike.
Featured Image: Visa and MasterCard Credit Card Closeup by Hloom, Flickr