A global tech startup called Beam Wallet intends to leverage the power of blockchain technology to enable faster, more affordable payment processing via smartphones. Along the way, it also hopes to completely disrupt the traditional credit card payment processing industry.
Only time will tell if Beam Wallet is going to be the innovator and disrupter who will make credit card terminals extinct. But for the time being, the company is offering a special incentive – no merchant fees. The question remains, however, whether that is enough to incentivize enough merchants, and smartphone users, to participate in this innovative payment processing platform.
In order to succeed, Beam Wallet will need high volume transaction traffic on its blockchain network. That is because the bigger the blockchain grows, the more efficiently and cost effectively it can operate to process payments with lightening fast speed. Without high-volume adoption, the system will likely suffer from annoying transaction delays, plus higher costs per transaction. But that kind of widespread adoption is easier said than done. It’s already proven to be a challenge that no alternative blockchain-powered currency has overcome.
Beam Wallet integrates with point-of-sale systems to process transactions, working like other mobile processing applications. It can work via NFC, Bluetooth, or QR codes. But what distinguishes Beam Wallet is its integration of blockchain technology. A blockchain system is a decentralized digital ledger that can enable direct customer to merchant financial transactions.
That kind of direct exchange is similar to a purchase made face-to-face with cash, where no intermediaries are needed. Both parties to the transaction own and control the transaction data, and middlemen are rendered irrelevant and obsolete. Merchants have fewer hands in the cookie jar to tack on processing fees that typically nip 2% to as much as 4% on every transaction.
Third-party involvement now siphons trillions of dollars a year through processing fees as well as credit card terminal leases, chargeback fees, and PCI compliance costs. So mobile processing, which helps to eliminate those middlemen, is definitely here to stay. The global market for mobile payment technology continues to expand and develop, with sophisticated security features and protocols like full encryption, tokenization, and PCI compliance.
Blockchain, on the other hand, is still in the experimental phase. But it does show paradigm-shifting potential that could offer disruptive innovation across multiple industries. Researchers at MIT and the Centers for Disease Control (CDC), for example, have been exploring how to use blockchain to provide a much more secure chain of custody for digital medical records. They also believe it could enable faster sharing of that data amongst healthcare providers and researchers, in an industry where time can be the difference between life and death. Blockchain technology is also used by NATO, the U.S. Defense Department, and the government of Estonia – the nation where Skype technology was invented. Estonian government records, including citizen ID cards, are securely stored on a blockchain network.
It is easy to imagine how disruptive that kind of innovation could be for the payment processing industry. Blockchain technology definitely has a future, and it will be exciting to watch as it unfolds. But as far as Beam and Blockchain’s payment system application is concerned, it’s really much too soon to tell.