Earlier this week the National Automated Clearing House Association (Nacha) announced plans for a new blockchain system, Phixius, to enable the exchange of payment-related information.
Nacha runs the ACH payments system in the U.S. which in 2018 processed 23 billion payments with a value of $51 trillion. In terms of dollar value, this is by far the dominant U.S. electronic method of payment.
A major avenue for fraudsters is to replace real recipient bank details with their own. It’s commonplace to hear of scams in which a seemingly legitimate email arrives at an accounts department with an attached invoice. But the payment details are not the correct ones. Sometimes there’s an added sense of urgency if the fraudulent email appears to come from the person’s boss.
“Traditionally, the exchange of payment-related information has consisted of multiple bilateral agreements. Unfortunately, that limits broader industry adoption and fails to address today’s interoperability expectations. Phixius changes all of that,” said George Throckmorton Nacha Managing Director and Executive Director of Afinis Interoperability Standards.
He continued: “Phixius eliminates the need for multiple data exchange agreements by leveraging blockchain technology, standardization and rules that govern network participants.”
The solution won’t just be about validating account information. It will also include B2B directory services and requests for payment. The ultimate aim is to encourage more electronic payments.
Nacha has awarded the development contract to EY and EY’s blockchain platform is based on Ethereum.
Others are working on solutions to serve a similar purpose. For example, Tradeshift is working with fraud protection firm SiS to store blockchain-based supplier information.
Numerous national payment organizations around the world are exploring using blockchain. In India, the NPCI wants to use blockchain to reduce the need for interbank reconciliations. A similar solution, Spunta, is live in Italy.