In a 2021 report titled Payments are Eating the World, J.P. Morgan stated that the next decade will see revolutionary and foundational changes within the payments industry. But how could blockchain applications, specifically, help this essential and all-encompassing field?
Blockchain For Payments: The Continued Disruption Of Payments
Payments can mean all sorts of different things to different people. If you run a small business, it might mean people paying for your product in-store with a card (also known as business to consumer or B2C). If you sell a product or service to another business, you might think of it as sending an invoice to them and receiving money (also known as business to business or B2B payments). These are just a couple of practical examples, but of course, the list goes on.
It’s a huge, complex, and fast-moving industry and the term “payments” can be used to cover any process where money changes hands. In this article, we’ll take a look at how blockchain already impacts the payments industry, as well as how it could evolve in the future in the face of ever-changing regulations and technologies.
A standard such as ISO 20022 now mean that there’s a new global protocol for payments between financial institutions. Beyond the new regulations, technologies like AI, quantum computing, and blockchain have forced the payments industry to move faster than ever, with major new developments being made every year.
“It’s no surprise that payments is a business open to great disruption by fintech companies. Traditional payment systems were built long ago and customer expectations have evolved quickly and dramatically along with the technological advancements we’ve experienced in our personal lives.”
— J.P. Morgan
J.P. Morgan’s 29 page report mentions blockchain 15 times and suggests that its acceptance by businesses and institutions is only going to increase. It seems this distributed ledger technology, used to record transactions across a network and ensure transparency and immutability, is here to stay.
But the broader payments system is being disrupted even today by companies like Revolut and Stripe. How might it evolve into the future as blockchain applications become increasingly popular?
Blockchain For Payments Beyond Crypto
The core idea behind blockchain (although surprisingly, not the term itself) was famously created by Satoshi Nakamoto in the Bitcoin Whitepaper. It might have originally been developed as a platform for cryptocurrencies to run on, but the underlying technology has a plethora of applications far beyond that. But unfortunately, in the intervening years, blockchain’s association with crypto has probably done more harm than good to its reputation!
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