By: The R3 Team
At CordaCon 2020, SAP and R3 hosted a joint discussion on token-based payments – explaining how using R3’s Corda to tokenize payments, and integrating these with legacy payments systems, can realize a new future vision for payments globally.
Today’s global payments systems are burdened by a wide range of challenges – and blockchain technology opens up a way to consign these familiar problems to history. It offers a way to simultaneously eliminate liquidity and settlement risk, allow for simultaneous atomic financial transactions, and remove the single point of failure inherent in RTGS or ACH systems, through decentralization. Yet to do all this, DLT cannot simply replace existing payments systems. It must integrate with them – which is a key focus of payments innovation currently underway with R3 and SAP.
“DLT gives us the power to consign familiar problems to history.” – Peter-Antonius Bramm, Global Innovation Manager for Banking and DLT/Blockchain, SAP SE
R3 and SAP’s vision for the tokenization of payments aims to do more than improve banking and payments systems globally. It will do this by enabling seamless cross-border money transfers, massively simplifying and cutting the costs of cross-border trade while eliminating money laundering.
As the speakers highlighted, Corda’s architecture is a natural fit for payment systems, aligning neatly with all the key payment industry characteristics. These include:
The outcomes of using Corda to underpin the next generation of payment functionalities and integrate with existing systems come down to five key points. First, tokenization promises a new era in payments, reducing cost and risk and simplifying processing. Second, a key prerequisite for this new era is to enable interoperability between legacy systems and DLT networks. Third, legacy systems – despite their complexity and fragility – use standardized messages to talk to each other. Fourth, these standard legacy messages offer an entry point to link the old world with the new world. And last but not least, by plugging into legacy, the full promise of DLT can finally be translated from vision to reality.
To learn more, watch the discussion on token-based payments at CordaCon 2020.
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