Are we over-focusing on payments?
Have you noticed how, when you go to the supermarket, you’re completely absorbed in the payment process and give virtually no attention to what you’re buying, whether it’s fit for purpose, or even if it’s actually in your trolley?
No, nor me. That would be ridiculous. But…
When we spend a hundred quid on stocking the fridge, we’re a lot more interested in the sprouts than the spends. For Tesco of course, the money is the reason the shop was built, but they’ll not see a penny unless they stock their shelves with the stuff you want to buy. Delivering that service is more complex but essentially no different. They pay money and receive goods, but those functions have little contact with one another. They’re handled by multiple departments, and take their information from different sources. And we end up with the situation that we agreed would be ridiculous in a supermarket, but commonplace when we’re spending tens of thousands on a cross-border payment.
The aim of the transaction was to make a trade, not just make a payment. What happens if we join the dots?
We’ll zoom out a little further to see a shipment of bananas to be delivered from Costa Rica to the UK. The finance department needs to see an invoice, the value of which matches the purchase order. The purchasing department had to liaise with shipping agents and customs. Goods inwards needed to check the shipment for quantity and condition. Logistics needed to get the goods to the appropriate stores. Everyone was dealing with the same transaction, but mostly they relied on a complex information chain and melded information with different external organisations. Across the Atlantic, the exporter needed to see a payment that matched the invoice. The intervening financial institutions asked for copies of those documents*, and at least those at each end of the transaction onboarded their respective customer. Compliance was satisfied and everyone’s happy. But the payment was being made for a purpose - it was part of a process, not a process in itself.
I recently read an excellent Linked In article by Harold Bossé at Mastercard, wherein he points out the importance of interoperability in seamless payments. My submission is that this interoperability needs to extend beyond those concerned in the transfer of funds and encompass the whole process. We’re talking about transparent commerce, not simply transparent payments. Returning to our Tesco analogy, a lot of dots needed to be joined to ensure that the shipment arrived undamaged and was of acceptable quality. And for that to happen, shipping companies needed to move the goods, stevedore organisations needed to onload and offload. Harbour authorites and customs offices needed to oversee and manage the journey, supply chain finance needed to monitor progress, and so on. They’re all part of the same process, yet there’s little or no crossover between them.
Extending the eKeyiD mechanism
As the operators of a sophisticated federated ledger to drive our eKeyiD technology, CertiQi is strongly aligned with smart contracts, but we see them more holistically than just matching delivery against settlement. If we look at payment as a component of commerce then we can deepen our depth of field** to take in the entire supply chain and the businesses that drive its components.
We invented the eKeyiD ecosystem initially as a means of extending the messaging capacity of SWIFT without requiring users to adopt new technology. But its utility has already proved itself beyond this. Several financial institutions that aren’t members of the SWIFT network exchange eKeyiDs through APIs or even email. Its ability to share freely without breaching privacy requirements has greatly improved transparency and simplified inter-company cooperation. Now we’re partnering with supply chain and associated providers to allow supply chain and trade finance companies to synchronise funding with delivery. Next will be connecting harbour authorities and stevedore businesses to allow berthing and trans-shipping to be allocated in advance. All of them can interact through using the same eKeyiD to share and access documentation relevant to their function within the commerce lifecycle.
This is an exciting concept because it allows multiple smart contracts to operate using a single data set. The nature of the contract is entirely in the control of the participants, and it can operate discretely or interact with any other contract. Every interaction, transaction and document is immutably stored in the DotLedger federated ledger for record-keeping and audit,
And to return to Tesco, all those departments that were involved in moving the bananas from the bush to the trolley can now act on the same, constantly updated data source.
If we see payments within the broader spectrum of whole-business then we don’t just improve transparency and compliance, we change the commerce landscape.
* or at least they should have.
** Yes, I know I’m overstretching the metaphor now