JPMorgan Files Patent For Blockchain Cross-Border Payment Networkbr>
JPMorgan Chase has applied for a patent to use blockchain technology for the reconciliation and facilitation of financial transactions between banks.
In a patent application published by the US Patent and Trademark Office on Thursday, JPMorgan is seeking to use distributed ledgers to keep track of payments that are sent between banks using a peer-to-peer (P2P) network. The technology would provide “a unique system for recording transactions and storing data.”
“In one embodiment, a method for processing network payments using a distributed ledger may include: (1) a payment originator initiating a payment instruction to a payment beneficiary; (2) a payment originator bank posting and committing the payment instruction to a distributed ledger on a peer-to-peer network; (3) the payment beneficiary bank posting and committing the payment instruction to the distributed ledger on a peer-to-peer network; and (4) the payment originator bank validating and processing the payment through a payment originator bank internal system and debiting an originator account,” the filing said.
The patent also criticizes the existing systems in which banks move money around the world, calling the status quo slow and expensive.
“For a cross-border payment to be made from a payment organization to a payment beneficiary, a number of messages must be sent between the banks and clearing houses involved in processing the transaction,” the filing said. “This often results in a slow transaction, as there may be delays in service due to correspondent banking, messaging networks, and clearing intermediaries in the payment flow. The transaction may also be expensive, as there are duplicative reconciliation and reporting costs across participants and within banks to enable transparency and payment tracking.”
The bank has recently been particularly active in its engagements with blockchain technology. Last month, JPMorgan Chase, Goldman Sachs, the National Bank of Canada, and other large firms have tested a new blockchain platform for issuing financial instruments. The trial mirrored the Canadian bank’s $150 million offering on the same day of a one-year floating-rate Yankee certificate of deposit.