Blockchain for secure contactless payments amidst the crisis
With mobile payment applications such as Apple Pay and PayPal, the digital payment industry has witnessed massive growth in recent years. The rise in disruptive technologies like blockchain can make these payments faster, secure and more efficient.
As the world suffers from a deadly contagious virus, the importance of online or contactless payments has skyrocketed. It’s even more critical to avoid touching physical bills, cheques, and banknotes to protect ourselves from the virus.
Central banks of various countries are quarantining physical bills to avoid any potential contact with the virus. The central bank of South Korea keeps banknotes in a safe for up to two weeks to remove any traces of coronavirus. US and China have also adopted similar policies before circulating these notes into the economy. The Bank of England recommended people to wash their hands or sanitize properly after handling cash.
Banknotes may be spreading the new coronavirus so people should try to use contactless payments instead. — World Health Organization
Contactless payment devices such as mobile, digital wallets, debit/credit cards offer fast and secure payment methods. They allow for payments with a single tap of a card or mobile, requiring less physical interaction.
As per a report by Research and Markets, “Global contactless payment market is expected to reach $18 billion by 2025 at a CAGR of 11.7%.”
With the rising integration of contactless payment technologies in devices like phones and watches, the demand for such solutions has risen tremendously worldwide. More and more consumers are opting for mobile payments or tap to pay transactions to avoid handling cash and bank cards during the pandemic. However, online payments have their own setbacks which lead to security issues and frauds. Card data security is another challenge customers face. Sending payments across borders can be slow and expensive too.
How blockchain brings a solution
Blockchain offers a distributed ledger system where transactions are stored and updated in real-time. Every transaction recorded on the block is time stamped, making the data immutable and tamper-proof. This way, blockchain brings trust and security in transactions for both the buyer and seller.
Paying through a blockchain-based system, the transaction will be contactless, fast, secure, and both parties can trust each with little or no chances of fraud. Furthermore, since the data will be stored in an encrypted form, nobody will be able to modify it.
Another significant utilization of blockchain is effectively tracking the supply chain of goods and food items. This can allow governments to trace the distribution of relief fund and medical supplies in a transparent way.
Several companies have already started exploring blockchain technology to boost contactless payments.
· SETL, a London-based Fintech company, has partnered with Deloitte to develop a contactless payment card based on blockchain to make faster and more secure retail payments. Apart from enhanced security, the system can also make settlements and payment processes more efficient, saving up to $80 billion in associated costs.
· Another India-based company, Tone Tag, aims to solve current payment challenges with a blockchain-based contactless payment system. With this system, customers can identify whether retailers or outlets they are dealing with has been involved in frauds or prone to payment risks.
· Countries like the US have been exploring central bank digital currencies (CBDCs) and stablecoins to send the Coronavirus relief fund directly to individuals. This could be a significant update from sending stimulus package through checks which is extremely slow and has several flaws.
· In China, AliPay has launched a blockchain-based platform to enable NGOs and other organizations to collaborate more efficiently for allocation of supplies and donation of the relief fund.
Read more on how businesses are using technology to fight coronavirus.
Blockchain is emerging as a disruptive solution for secure, quick, and transparent money transfers. As the blockchain innovators continue to explore the technology, governments can think of building advanced payment solutions that can replace the legacy systems. Consequently, countries can become even stronger in fighting against such crises in the future.