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JPMorgan debuts blockchain-powered programmable payments feature

The system uses blockchain technology to let companies automate cash movements near-instantaneously, outside of traditional working hours.

JPMorgan, the largest bank in the US, has officially debuted a new programmable payments feature on its blockchain-based payment system, JPM Coin, according to a report by Bloomberg.

The system, which is dubbed the most “high-profile” blockchain system in traditional banking, allows companies to automate transfers based on preprogrammed conditions.

This enables companies to fulfil financial obligations, such as overdue payments and margin calls, near-instantaneously, 24/7. It also removes the need for standing orders, since payments can be programmed to take effect when a specific criteria is met.

The network is permissioned and is only available to JPMorgan’s institutional clients.

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Naveen Mallela, head of Coin Systems at JPMorgan’s blockchain division Onyx, said, “If you think of the current bank account provided by any financial institution, there is only so much you can do in terms of configurability and set of rules; that is what we are changing.”

Mallela said that this is the “first instance” of a traditional financial firm building scalable programmable payments, using existing commercial bank money.

A key advantage to the system is that it can potentially earn higher income on deposits in low-interest rate environments. Mallela explained, “When rates are close to zero, treasurers are less bothered, but when rates are 5.5% or rising, that is when all these capabilities start becoming more attractive.”

Siemens, a German multinational tech conglomerate, debuted the new feature to move funds, according to Bloomberg.

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