Financial services giant American Express, popularly known as Amex, is looking at blockchain technology to expedite payment transactions. The travel services arm of Amex, also called the American Express Travel Related Services Company, had filed a patent application for a blockchain-based solution, and this has been recently released by the US Patent and Trademark Office (USPTO).
Payment transactions inside the Amex travel services system, as with other company’s systems, happen via third-party banking services. If a technology solution could allow the payment transaction to happen directly inside the travel services website or app, a few routing steps can be reduced, and the user will experience a faster transaction. However, the technology solution must be secure.
Amex found that blockchain fits the bill. Blockchain is a decentralized network, where computers on the network, called ‘nodes’, maintain a distributed database in a shared manner. Every node has the complete information on the blockchain, and the system can’t be destroyed by taking out any central server. Moreover, blockchain employs a consensus mechanism, and that ensures that only the transactions approved by the majority of the participating nodes are recorded on the blockchain, and the approval is done only after evidence of very significant number-crunching is provided. Such rigor makes hacking blockchain economically non-viable, hence it’s secure.
Amex‘s proposed solution can be summarized as following:
- Since this is a payment solution specifically for users of Amex travel services, the solution will use a separate blockchain, and not a public blockchain like Bitcoin.
- The payer and payee need to create digital wallet on the proposed Amex blockchain.
- Payer and payee will have their accounts associated with their respective digital wallets.
- The payment request, including payment amount and digital wallet address, will be processed by the system. It may be approved or rejected, due to various factors.
- If approved, the payment amount will be directly transferred from one digital wallet to the other, without any need to route the request to any 3rd party bank.
- The balance amounts will be adjusted in the respective digital wallets.
Amex, headquartered in New York, USA, is awaiting the grant of the patent, however, they also have another patent application for using blockchain in their customer rewards program. Amex‘s interest in blockchain conforms with the trend of big businesses being increasingly interested in blockchain, for e.g.:
- IBM is exploring entry into cryptocurrency space;
- Microsoft is planning to invest into blockchain start-ups using their venture capital (VC) arm;
- Intel has a plan to use blockchain in the field of genetic sequencing.
