SBI Ripple Asia has recently partnered with the Japanese Payment Card Consortium to fight fraud with blockchain technology. According to BankingTech’s article published on November 22, 2018, the participating companies plan to prevent the damages caused by fraudulent transactions, by sharing data and information on a real-time basis along Corda, R3’s open-source blockchain platform.
Payment Card Consortium to Share Data
BankTech’s article reported that the members of the Japanese Payment Card Consortium include nine credit card issuers and two payment-card technology providers, namely, American Express, Aeon Credit, Epos Card, Orient, Credit Saison, TD, JCB, Toyota Finance, Sumitomo Mitsui Card, Sumitomo Mitsu Trust Club, and TIS and Hewlett-Packard Japan.
TID, a member of R3 consortium of banks, will also develop a data sharing system on Corda. For the Proof of Concept (PoC), the information is shared amongst the participating card companies. The consortium, however, will consider sharing information with others involved in the industry such as merchants, and payment service providers (PSPs). By sharing the information with the appropriate scope, content, and to the correct stakeholders, the PoC may hopefully aid in the prevention of fraud.
The Consortium plans to leverage blockchain technology and artificial intelligence to boost and improve the operational efficiency of companies involved. It wants to create an effective settlement ecosystem by improving the user experience, increasing productivity, and reducing social costs in Japan’s cashless society.
Blockchain To Fight Financial Fraud
Japanese Payment Card Companies aren’t the only organizations keen to trial blockchain as a tool to fight fraud. SWIFT India, recently partnered with MonetaGo to pilot blockchain technology to prevent fraud that would benefit all Indian Banks. The idea is to provide a decentralized ledger-based network for banks to boost the security and efficiency of their financial products and services.
While many banks and payment providers are testing blockchain technology to fight financial fraud, Raconteur, a London-based content publisher for leading journalism brands is, however, skeptical of blockchain technology. Although the company acknowledged that blockchain technology could be a tool to prevent fraud, it definitely should not be heralded as a silver bullet. Blockchain technology is unfortunately only as safe, or as fraudulent as the humans behind it.
“Any information processing system that has bad input provide bad output,” said Eric Wall, a cryptocurrency and blockchain lead at Cinnober. The blockchain can only be aware of the inputs, not the reality.”
Wall added that if we had the authority to input bad data, the blockchain would still validate the data. While blockchain technology can transform existing processes, it’s still highly dependent on the real world and trusted sources of information and authorization. If one can corrupt the information and data, they can corrupt the process.