Blockchain can help improve payment systems for American Express. It provides a promising payment proof unlike system generated receipts or tickets that can be tampered and un-assuring.
Proving when and where payments occur, play a pivotal role in service provision to third party clients and the bank itself. This will reduce or even eliminate payment failures, petty fraud and bad debts for clients. B2B clients are likely to rise, generating awe and awareness on the subject.
According to American Express;
‘Cryptocurrencies prevent funds from theft, hacking and malware’ and ‘The underlying blockchain filters out fraudulent and/or duplicate transactions.’
American Express has already filed for a patent for the blockchain technology with the U.S. Patent and Trademark Office.
The released patent application states that American Express Travel Related Services use a ‘blockchain-based
system’ in order to receive ‘payment confirmation – the transaction amount and a merchant identifier’ to verify its
payment status and further the process of service vendoring.
American Express highlighted the need to preserve this technology as it protects “transaction data, contract data,
proof-of-payment data, identification data, and/or other information as desired,” such a blockchain network would
serve as an extra layer of proof for transactions that take place on banking network.
The system may write the encrypted proof-of-payment payload to a blockchain maintained on a first blockchain node.Abstract: AmEx Patent application
This technology may be used in hotel rentals, shared housing or property usage and aid in shared asset utility, reducing the risk of default. It also creates potential for ticket-less access to venues and services such as travelling, entertainment and celebration via concerts, movie theaters, public transport, clubs and so forth.
It allows commerce and digital/online banking to break through barriers and reduce the market limitations. Enabling the future of commerce and industry has played a pivotal role in American Express’s success as a brand and a business.
American Express has already delved into the future of fintech by tying knots with Ripple Tech as announced in November 2017. This has allowed cross continent money transfers that can be completed within few seconds. This makes payments across and beyond the Atlantic safer and time lag free. The real time access this transaction creates is game changing for international trade, political warfare and the future of science and tech among global economies while cross border payments remain secure and yet audit-able. The underlying end-to-end encryption makes the process investment worthy and highly promising.
Ripple’s global head of strategy, Marcus Treacher, stated that SEB platform conducted transactions worth $630 million in the first 6 months of its launch. American Express is keen on filling such gaps on the scope and adoption of the blockchain system from late 2017.
Dealing in cryptocurrency reduces the transaction time dramatically, making international negotiation easier and
faster. It also reduces the risks of any dispute on the exchange rates. It will also play a majorly comforting role as a contingency fund for the business giant; by lubricating future prospects and insulation from national or local currency demise. Cryptocurrencies already benefit from low RTGS fees compared to the Central Bank. Such advantages may extend to American Express after implementation.
However, the cryptocurrency exchange rates are extremely volatile. Businesses can risk significant losses if they run cash positions in cryptocurrencies for any length of time, though they may of course also profit from exchange rate gains. Specialist banks may ease this by providing speculator services and guidance.
Trials for this technology have already begun through their rewards programme. This urge to implement and patent the blockchain systems may be an off set or a byproduct of the patent for a customer rewards programme filed earlier. It seeks to squeeze the most out of this wonder tech nonetheless.
American Express believes it is likely to improve market standards, making it best in class. It will open new avenues for international payments and cross-country fund exchange and lubricate international trade for it’s clients.
Blockchain and cryptocurrencies may serve as stepping stones towards more sophisticated service provision and becoming market leaders. By allowing its customers to use a bitcoin wallet, American Express has paved the future of finance market. This ensures its market positioning as that of a market leader in the very long run. The ability to adopt and allow customers to adapt will not only ripen its return on capital employed but give it a major technical head start. This allows troubleshooting and problem solving before any other bank can even begin planning to move to the system. The early mover advantage will with a great deal of grace, subtlety shape the outlook of American Express as a brand in the eyes of the customers both end consumers and B2B, potentially adding to the market share.
A transfer to the technology may enhance the general functioning of the financial services giant and the competition-fueled finance industry itself. Any banks that choose to remain unaffected and unmoved by the upgrades of fintech world are choosing the wrong side of history that the future will conveniently forget.
It is a fairly calculated risk, even with the most stringent conditions applied. Other banks are clearly lagging, as
American Express hits the industry sweet spot repeatedly.