Blockchain’s Real-Time Payments Use Case

Players in payments and commerce keep trying to get their heads around blockchain technology, seeking out use cases and striving to determine if the reality can ever live up to the hype. Answers are relatively slow in coming, and skepticism abounds. However, in Canada, real-time payments, energy and incentives have combined in a way that includes blockchain, which would pave the way for other such efforts.

That’s the story told by Oscar Roque, AVP of innovation, research and emerging solutions at Canadian payments network Interac, in a new PYMNTS interview. He spoke about how the organization has found a potential, new payments-related use for blockchain, how it can be used to bridge together previously independent organizations and what might come next based on that push, as Interac continues to innovate in the FinTech space.

Pilot Push

For a three-month pilot that ended in May, he said, Interac worked with Alectra Utilities to offer real-time disbursements to consumers using Interac e-Transfer (Canada’s leading P2P and B2B digital money movement service). Roque said Alectra made the offers to several consumers and, by using blockchain, was able to “incentivize” consumers based on their “climate-friendly” behaviors, an example of how Interac is looking to innovation with social purpose.

More specifically, the program applied to Alectra customers with solar panels, batteries and/or electric vehicles, who could earn real-time disbursements by, say, not charging those vehicles during peak periods, or taking similar conservation steps. The program also involved a relationship with IBM for what Alectra described in a statement as a “flexible compensation plan.”

“The marketplace provides a single, permanent ledger that is trusted across the network, and blockchain enables the energy transactions to be settled, and digital assets exchanged, among all stakeholders,” the utility said.

According to Roque, the pilot produced consumer feedback that “was absolutely tremendous,” and could inform future blockchain and payment efforts involving Interac and other organizations. The real-time disbursement aspect led to changes in consumer behavior that promoted them to be climate-friendly, he said.

Roque noted that, in addition to learning how to incentive consumers, and the importance of innovation with social purpose, “the pilot provided significant learnings around multi-party governance on blockchain, trust and consensus models, and new business modeling through the creation of new business networks.”

Hot Topic

Blockchain is certainly a hot topic when it comes to digital payments and commerce, and more authorities and organizations are trying to gain an edge when it comes to the technology. A recent example of that comes from Nevada.

As PYMNTS recently covered, Governor Steve Sisolak signed the following bills into law: SB161, which creates a regulatory sandbox for emerging tech companies through a program in the Department of Business and Industry; SB162, which develops a definition for “public blockchain” within Nevada Revised Statutes, and requires government agencies to accept electronically certified documents; SB163, which authorizes businesses to store and maintain corporate records on blockchain; and SB164, which defines virtual currencies as intangible personal property.

That said, blockchain is no silver bullet, to put it mildly. Much confusion, and even false promise, surrounds the technology, which is often primarily associated with the world of cryptocurrencies.

Blockchain Problems

For instance, when it comes to blockchain technology, the crux of many of its purported benefits for the enterprise is its decentralized nature, which, proponents of distributed ledger technology (DLT) have said, promotes visibility and makes it more difficult for data to be manipulated. The security benefits of decentralization make blockchain an attractive fit in corporate finance. Popular use cases that have emerged in recent years include blockchain’s potential to securely transmit remittance data along with payments in cross-border B2B transactions, enable companies to use smart contracts to enforce business agreements in B2B trade and mitigate the risk of fraud in supply chain transactions.

However, the lack of a central authority can make enterprise development, and the implementation of blockchain-based solutions, extremely difficult and friction-filled. For example, corporates often go it alone when creating a blockchain solution, and that lack of a central intermediary can make it difficult for companies to find guidance.

In talking about potential future use cases of blockchain with PYMNTS, Roque offered optimistic realism about the technology, avoiding hype. He discussed how blockchain — assuming it is attached to relevant, pragmatic use cases — can add incremental value to a business or other organization. That said, the promise of blockchain “is probably overstated with banking,” at least when it comes to the ability of the technology to “significantly disrupt banking.”

In fact, in Roque’s view, the excitement about blockchain has subsided over the last two years or so. “The hype has started to die down. We are now in the trough of disillusionment,” he said. However, that’s not all bad for the further development of blockchain, he added, as “in the trough is where the real work gets done.”

Blockchain is a massive work in progress — a technology in search of solid use, if not eventual mainstream acceptance. When applied correctly, it has the ability to significantly change the way organizations do business with one another. As Interac has shown, use cases are out there, and more research and validation is on the horizon.