Blockchain payments continue to attract interest from financial institutions exploring new ways to improve transaction speed, security, and efficiency. By enabling peer-to-peer value transfers without relying on traditional payment rails, blockchain technology has the potential to reduce settlement times, lower processing costs, and support new digital payment experiences. As payment providers evaluate distributed ledger technology, many are developing new capabilities that could reshape the future of real-time payments and digital commerce.
An article in Coindesk reports that American Express has filed for a patent on a payment process involving blockchain. What is interesting about the analysis of this patent, beyond the use of blockchain, is the payment process that is described. American Express has developed (at least on paper) the mechanics to offer a real time payment for purchases that isn’t card based and doesn’t use the existing payment rails. This may indicate a new direction in payments for American Express, or a patent to protect intellectual property around this type of transaction.
In a patent application released by the U.S. Patent and Trademark Office on Thursday, the credit card company’s travel arm – the American Express Travel Related Services Company – describes using the tech (blockchain) to facilitate payments between two parties by using transaction requests as a proxy.
In order to access the system, parties conducting a transaction must create digital wallets on the blockchain. As a result, the payments are conducted directly through the blockchain, rather than through a third-party banking institution.
Notably, the company further suggests that a blockchain system could improve upon current card payments networks, writing:
“A payment network based on peer-to-peer payments may be used to facilitate most functions of traditional card payment networks and to enable additional services and functionality.”
While many blockchain payment initiatives remain in the development or patent stage, they highlight the industry’s focus on modernizing payment infrastructure. Financial institutions are exploring how distributed ledger technology can complement or enhance existing payment networks while enabling faster, more secure transactions. As blockchain payments mature, they are likely to play an increasingly important role alongside traditional payment systems in the evolving digital payments ecosystem.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
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