Paystand gives business customers an end-to-end digital business-to-business payment platform.
How the blockchain will disrupt financial services
Lighthouse Partners director Pete Harris explains why the blockchain is popular with companies and how the technology will disrupt banks and financial institutions.
The Japanese payment network JCB has signed a deal with the US blockchain-based commercial payment platform Paystand to offer the first end-to-end digital payment platform for companies and customers in Japan.
Jeremy Almond, CEO of Paystand, says JCB’s 130 million customers are the largest payment processor in Japan and Korea, accounting for more than 80% of all digital payment transactions. But on the business-to-business side, more than 90% of all payments in Japan and Korea are still made in cash or on paper, he added.
“The challenges facing B2B companies around the world are similar: they are burdened by a commercial payment infrastructure entangled in pre-internet technology,” Almond said. “As a result, they are burdened with a legacy system full of costly transaction costs, manual processes and delays. Our agreement with JCB is yet another indication that businesses in all markets demand simple, secure, frictionless business payments that use digital technology.”
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Business-to-business transactions in Japan account for nearly $ 10 trillion dollars in terms of annual volume, but only 1% of commercial payments in Japan are currently made through credit cards and an even smaller fraction is done through technology such as bank transfers.
These methods of transferring funds are slow and involve costs that cost businesses hundreds of millions per year. The aim of Paystand is to reduce costs using the blockchain technology and the Payments-as-a-Service model.
“How do you create this magical gel experience that we have at the consumer level, where you walk through the Starbucks and you are able to use your Starbucks app and money just moves automatically or when you come out of an Uber and when you get your location, money just moves automatically, “Almond said.
“We think the same thing should happen on a commercial level, and what blockchain smart contracts allow you to do, when there is a contract that says your customers will pay you within 30 days after you have delivered these goods and services, that money can move automatically We think this is the kind of trend that you will generally see in commercial financing. ”
As part of the agreement, Paystand will build a platform to accelerate the time it takes for companies to receive payments and reduce the type of fraud and errors that paper-based systems have plagued.
“The solution connects payers and suppliers through cloud-based payment infrastructure with real-time fund verification that reduces Days Sales Outstanding (DSO) by an average of more than 60%,” the company said in a statement.
“Paystands blockchain-based payment infrastructure records an invariable record of each transaction, eliminating the potential for intentional fraud. The entire payment experience can be branded and integrated directly into the merchant’s existing workflows,” the company said.
Almond explained that the general dependence on paper checks prevented companies from using more efficient digital methods that could simplify the money transfer process and ultimately lead to companies getting their money faster. He compared Paystand’s work with complicated commercial transactions with what Venmo has done for basic transactions from consumer to consumer.
The ultimate goal is to use the Payments-as-a-Service platform to help the debtor and creditor departments of an organization get their money faster, cheaper and in a more automated way. Although Paystand charges institutions for using their service, Almond said it was less than traditional methods because of removing all other costs.
Christian Gammill, a leading Paystand company, said collaboration with JCB has cemented the company’s position as the leading payment technology in Japan and has dramatically increased its reach.
“JCB has a long history of innovation and we are excited to work together to bring digital transformation to one of the company’s final limits – the money cycle,” said Gammill.
With Paystand, blockchain technology serves as “financial sanitation” for companies to create a more open infrastructure, which according to Almond ultimately led to better delivery mechanisms that make products and services cheaper and more efficient for customers.
According to Almond, Paystand has more than 150,000 companies in its payment network and cooperates with companies in the hospitality, insurance, food and financial services sectors.
“JCB is an iconic, globally recognized financial services brand and we are delighted to work with them to introduce better business payment technology to their customers and other companies in Japan and Asia,” Almond added.
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