JP Morgan Files Patent For Blockchain-Powered Payments Between Banks
Banking giant JP Morgan has filed another patent for a blockchain-based system for bank-to-bank payments.
Although originally submitted in October, the patent was made public by the US Patent and Trademark Office (USPTO) on Thursday. The patent describes a system to track payments between financial institutions using distributed ledger technologies, such as blockchain.
The patent outlines roadblocks in conventional bank settlement systems, stating: “A number of messages must be sent between the banks and clearing houses involved in processing the transaction… and clearing intermediaries in the payment flow […] [this may be] expensive […] [and] real-time settlement of payments is not possible […] transactions may be risky as there are counterparty and settlement risks associated with [the] correspondent banking network.”
The patent describes the proposed system as “a method for processing network payments using a distributed ledger, comprising: a payment originator initiating a payment instruction to a payment beneficiary; a payment originator bank posting and committing the payment instruction to a distributed ledger on a peer-to-peer network; the payment beneficiary bank posting and committing the payment instruction to the distributed ledger on a peer-to-peer network; and the payment originator bank validating and processing the payment through a payment originator bank internal system and debiting an originator account.”
JP Morgan – which built its Quorum blockchain on Ethereum – is one of 86 founding institutions of the Enterprise Ethereum Alliance (EEA). The EEA is an open-source blockchain initiative comprised of big banks, tech companies, and startups building business-ready versions of software built on Ethereum.