How Blockchain Is Becoming The Backbone Of Digital Payments?

Blockchain, a technology that claimed its fame with the ‘Bitcoin Boom,’ is now a technology that has grown beyond its identity as the one merely driving the cryptocurrency industry. Today, the technology is proving to be a game-changer in various use cases including payments, smart contracts, healthcare data sharing, supply chain management and cybersecurity alongside others. But how does technology make it happen?

Blockchain is based on a distributed ledger system which has a dynamically dispersed peer-to-peer (P2P) topology amongst different stakeholders. The structural design of the technology makes it impossible for a single user to tamper with the network, let alone gaining its complete control. This creates a highly secured real-time communication network for all stakeholders across different geographies with complete visibility (which, ultimately, depends on the blockchain architecture).

This eliminates needless intermediaries while driving superior time-efficiency and cost-effectiveness.

So, as revolutionary, secured, and transparent the technology is, can it also become the backbone of global digital payments or that of our country? Surely it can and, as a matter of fact, it is already becoming the same.

The Mainstay

Blockchain has proven its worth weighed in gold for a number of industries that faced various bottlenecks for a long time. For instance, the inherent inadequacies in the claim management system of the insurance sector amounted to a loss of INR 10,000 Cr on an annual basis. This is now being resolved with blockchain-based solutions, thereby acquainting the sector and its players with unparalleled efficiencies.

Cognizant of the true worth of blockchain and how it will help build a secured digital infrastructure for the nation, the Government of India is also focusing on IndiaChain – deemed to become the largest government-owned blockchain network across the globe. India has also spearheaded a number of trailblazing innovations of late. United Payments Interface (UPI) has paved the way for low-cost instant bank transfers with an expected fee of INR 0.50, which will be 2% to 20% vis-à-vis IMPS (currently, UPI-based transfers are free of cost). Its API is presently being used by tech giants for their proprietary remittance applications.

IndiaChain is believed to adopt a corresponding approach and enable different industry players in creating their own applications leveraging the larger infrastructure. This will help in creating a truly decentralized and shared economy with unprecedented market visibility. For the banking sector, it will truly transform different processes including KYC, international remittance, contract management, payments and loans.

At present, blockchain solutions are already helping catalyze digital payment adoption throughout the country. For instance, IoT-based self-help kiosks have been successful in eliminating long queues at various retail checkpoints. They empower a customer by enabling them to choose their own products/services and complete the transaction without any assistance from a sales agent. Simultaneously, since they are powered by digital payments, they add to the overall financial visibility by decreasing cash dependency.

Similarly, ATC (all-time-cash) vans are taking this approach to our rural heartlands, which essentially are home to around two-thirds of our national population. These ATC vans have a similar kiosk alongside a cash dispenser with effective reach to about XX villages. This is acquainting them with new-age payment mechanisms and services and, by this means, accelerating digital payment adoption across our nation.

All of this is happening when we are witnessing the amalgamation of different processes, approaches, infrastructures and sectors via digital technologies. Perhaps, blockchain-based solutions will make this ongoing development more safe, secure and effective. Ultimately, pushing our nation towards global prominence as a leading-edge solutions provider.