South Korea’s leading credit card firm Shinhan Card has been granted a patent for its blockchain-powered payment system, according to a report by The Korea Times. 

The Shinhan Financial Group affiliate claimed that it has developed the world’s first credit transaction service based on blockchain technology, offering credit card functionality such as setting spending limits, paying monthly installments, and handling payments to merchants.

Online Transactions Powered with Distributed Ledgers

According to a Shinhan Card official, these credit card functions set the blockchain-powered system apart from other services using distributed ledgers.

“Services using those key functions of credit cards will be extended to the blockchain-based system, a notable advancement from the status quo whereby most blockchain-based services available are limited to cash wiring or user identification for online transactions,” the official said.

The official explained that the patent was granted about a year and a half after the company started to conduct a feasibility study and that the firm is currently working to obtain patents in European countries, the United States, Japan, China, Vietnam, and Indonesia. 

Blockchain Payments to Disrupt Traditional System 

According to the report, the patented system could implement cardless credit transactions that would allow users to make payments via mobile application. This innovation will likely disrupt the traditional credit card system that has been based on three intermediaries: credit card companies, a value-added network (VAN) service provider, and a Payment Gate (PG). 

VAN service providers help connect credit card companies and member stores to verify and approve transactions, while the Payment Gate is responsible for carrying out the payment. With the new payment system, clients will be paying directly to merchants, without the need for intermediaries. 

“We, as the industry leader, will continue to explore ways to implement business models in accordance with the regulations,” the official said.

Source: http://www.koreatimes.co.kr 

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