South Korea’s biggest credit card operator, Shinhan Card, announced on Monday it had been granted a domestic patent and was developing a blockchain-powered payments system.
Shinhan Financial Group, an affiliate of the card company, said it had developed the world’s first blockchain service that offers full credit card functionality such as setting spending limits, making monthly installments and paying merchants.
Reported in the Korea Times, a spokesperson for the company said:
Services using those key functions of credit cards will be extended to the blockchain-based system, a notable advancement from the status quo whereby most of the blockchain-based services available are limited to cash wiring or user identification for online transactions.
The patent, filed with the Korea Intellectual Property Rights Information Service (KIPRIS), describes a system for building a blockchain “including a virtual currency generated according to a credit limit of a consumer”. Blocks will be updated on the blockchain according to payment details.
This means the company will be able to develop a cardless method of transaction allowing customers to pay for goods using an app on their mobile phones.
Shinhan’s spokesperson added:
We obtained the patent about a year and a half after we initiated a feasibility study including technology reviews. We are seeking measures to make the patent valid in European countries, the US, Japan, China, Vietnam and Indonesia.
Shinhan Bank Blockchain Ambitions
Affiliate Shinhan Bank has already made progess on blockchain technology, using a distributed ledger platform to speed up the approval process for loans and mortgages.
Instead of submitting identity, payslips and other important documents for manual verification, the bank will use blockchain to verify such items. Last year the bank trialled a cross-border remittances system for its business customers using Ripple’s blockchain.
Eliminate the Middlemen
Shinhan Card believes that by using blockchain technology in its payments system it will eventually eliminate the need for other financial intermediaries in the transaction process.
Credit card companies operate with two other counterparties in transactions: a value-added network (VAN), which acts as intermediary between card company and vendors to verify and approve transactions, and a payment gate (PG), a financial services provider which makes the physical payment.
Speaking to the Korea Times, Shinhan Card’s spokesman concluded:
We, as the industry leader, will continue to explore ways to implement business models in accordance with the regulations.