IBM and a number of banks have launched a new blockchain-powered solution to clear and settle cross-border payments using cryptocurrency. The move could see cryptocurrencies integrated with IBM’s trade finance blockchain projects at a later stage.

As Sibos, one of the world’s largest finance events, commences today, the tech giant announces it has developed a new cross-border payments solution in collaboration with blockchain startup Stellar and KlickEx, a money transfer operator in the South Pacific region. More than 13 banks are involved in the project.

The aim is to help simplify the way money is transferred across borders. Today, making international payments in multiple currencies can be costly, labourious and error-prone and require multiple intermediaries. By utilising the Hyperledger Fabric blockchain framework and Stellar’s cryptocurrency lumens, IBM says it can reduce the time it takes to transfer funds across borders “from days to seconds” as well as the cost to do so.

Speaking to GTR, Keith Bear, vice-president of global financial markets at IBM, says the payments solution is currently in “an early stage of implementation”. The parties have successfully conducted pilots and the first transactions are now flowing on it. As to when it will go into production, Bear says is still to be “determined through consultation with the banks that we are working with”.

The participating banks include BBVA, Sumitomo Mitsui Financial Group, Mizuho Financial Group, National Australia Bank, Bank Danamon Indonesia, Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia, Kasikornbank Thailand, RCBC Philippines, TD Bank, Wizdraw HK and “several big names” which have not been named. They will help expand the solution beginning early next year.

The initial focus will be on retail and SME payments in the South Pacific region, but ultimately the solution is designed to augment financial flows worldwide for all payment types and values. In the future, it could also be expanded to enable parties to enter trade agreements, manage trade documentation, secure letters of credit and finalise transaction terms with immediate payments.

“Clearly the ultimate value will come from a high level of adoption, but we are starting off with a low-volume environment around the Pacific Islands, which is a great place to start because it’s – relatively speaking – a neglected payment corridor. It demonstrates what the potential is and how it can work in practice and then we can work out, together with the banks, how to scale from there,” he says.

Settlement instructions are provided via smart contracts on the Hyperledger blockchain platform, but the actual settlement will be carried out via Stellar’s network. Stellar’s custom cryptocurrency lumens will “act as a bridge currency between fiat currencies on each side of the transaction”, Bear explains. The customer doesn’t touch the cryptocurrency themselves.

KlickEx, he adds, will serve as a market maker, buying and selling lumens for the banks to facilitate the process.

This method for settling cross-border payments is already being used or explored by some banks and payment providers. More than 100 financial institutions have to date joined Ripple’s enterprise blockchain network, RippleNet, to settle global payments leveraging blockchain technology. SEB, for one, has processed more than US$180mn in payments for a large corporate customer between Sweden and the US over the network.

Another example is BitPesa, an online payment platform, which helps thousands of clients in Kenya, Uganda, Tanzania, Nigeria and the Democratic Republic of Congo make international payments using bitcoin to settle between fiat currencies.

Cryptocurrencies in trade finance

IBM’s decision to enter the cryptocurrency space may be of particular interest to the many players already working with the tech company on a range of other blockchain projects.

For example, IBM and seven major European banks – the Digital Trade Chain (DTC) consortium – are soon going live with a blockchain trade finance platform for SMEs. The platform will enable buyers and sellers to agree on their transaction in a smart contract, to follow the physical flow of the goods through a track and trace system and to obtain financing.

IBM is also working with UBS and a number of banks on a similar project under the name Batavia. Both powered by Hyperledger’s Fabric, the platforms focus on the digitsation of processes around trade finance, but they use conventional methods for the payment itself.

According to Bear, the fact that the technology is consistent means that the new payments solution is “well-suited” to integrate with its other projects. As such, we could well see other consortia extend their trade finance platforms to involve payments using cryptocurrencies.

“Whilst the immediate implementation is just focused on payments, the potential is certainly to go into other areas as well. The overall design we are taking is certainly extendible to other asset classes,” Bear says.

“This solution is another example, on top of the what’s happening with DTC and Batavia, to potentially provide a better service to SMEs or corporates using trade finance facilities from their banks. Not only by providing more credit facilities, but in this particular example being able to reduce the cost and time of the payment transactions as well.”

IBM notes in a statement that financial institutions in the future will be able to choose the settlement network of their choice. This could involve the likes of Ripple or bitcoin. The solution will also be able to support the exchange of central bank-issued digital tokens.

The post IBM launches cryptocurrency cross-border payments appeared first on Global Trade Review (GTR).

Banking consortium R3 has pushed blockchain technology closer to production with the launch of its distributed ledger technology platform (DLT) platform, Corda v1.0, and called on banks to “make your choice”.

The platform, which the company describes as “blockchain inspired”, has been developed over two years with members of the consortium and will enable institutions to transact directly using smart contracts. As an open source platform, third parties can develop and implement applications, known as CorDappsusing Corda’s common code and protocols.

Corda v1.0 follows the open source release of the platform last year. R3 says it has now achieved stability of Corda’s core application programming interface (API) allowing for third parties to develop applications for the platform, with a guarantee that any future changes will not disrupt their work.

“The blockchain industry in reality is still quite young,” says R3 CTO Richard Brown to GTR.

“Many of these platforms are changing quite rapidly. What we delivered today will allow developers to plan and predict and hit deadlines. We committed today to keep the core designs, the foundations if you like, fixed. Which gives huge predictability and huge confidence to those building on top of it.”

Brown explains that by fixing the foundations, R3 has given away the right to change key parts later.

“I am aware of platforms that have plans to make quite significant changes that will force application developers to change their applications. We had to be very sure that our design was right and stable. It’s a big step and to my knowledge we are the first blockchain firm to make that commitment.”

“Time to make your choice”

Other platforms are also in the race to become the primary platform for trade finance. In July, Hyperledger released Fabric 1.0, which is backed by Linux open source technology, and also designed to be used for transactional operations.

In June, a consortium of seven banks announced they had chosen IBM to develop Digital Trade Chain (DTC), a blockchain trade finance platform for SMEs. When faced with a choice between Fabric and Corda, the developers went for Fabric 1.0.

Swift has also been working on a proof of concept (PoC) with the beta version of 1.0, for its nostro account reconciliation tool, within its global payments innovation (gpi) initiative.

Last month, R3 announced it has partnered with fintech firm TradeIX and 12 international banks to develop an open account trade finance application that will operate on Corda. The application will be co-developed with logistics companies and industry parties such as the ICC Banking Commission and the International Trade and Forfaiting Association (ITFA). However, the early users of the application will be only banks and their corporate clients.

As the race heats up, Brown argues that the roadmap for large-scale deployment is now clear and that it is time for developers and entities “to make your choice”.

 “The whole idea of these platforms is to allow the users to reduce their costs and share data with privacy with their peers. If lots and lots of incompatible platforms get deployed it doesn’t work,” he says.

“If you work through just the economics of this, it all points to a small number of platforms gaining widespread adoption. [However,] it won’t be one – different platforms solve different problems, so it will be three or four different platforms.”

Commenting on Hyperledger’s release earlier this year, and the selection of Fabric 1.0 by DTC, Brown says that as premier members of the Hyperledger project, R3, like in all businesses, both competes and collaborates with different organisations: “With respect to Fabric, I think we’ve set ourselves on a deliberately different course. The way that Corda is being designed, the problems we are trying to solve and the approach we’ve taken is different. There are multiple platforms in the market for different use cases. I don’t expect Corda to be selected for each and every one of them.”

Diverse and rapid uptake expected

 Having deliberately designed Corda for its members, predominantly large banks, the consortium says it has also seen a lot of engagement from other sectors including insurance, health care and government entities, as well as a large number of smaller scale startups.

“We have discovered through the open source community that people are finding use cases for it outside its original purpose. This tells me we have hit on the right design – if people are independently discovering that it’s capable of delivering,” says Brown.

With the launch of Corda v1.0, R3 now expects to see a ramp up in production deployment. So far numerous PoCs and pilots have been tested on the platform, which are now expected to go into production stage.

“My expectation is now that we have this commitment to API stability, the ramp up will be rapid. Those who may be waiting on the sidelines can now choose to engage with confidence,” says Brown.

“I suspect in the first half of next year we will be seeing publicised production deployment and then it will ramp up further later in the year.”

Meanwhile, at R3 the company plans to work on extra features for enterprise deployment and large-scale deployment over the coming months.

The post R3 launches Corda 1.0 calls on banks to ‘choose’ appeared first on Global Trade Review (GTR).

Risk and financial crime compliance solutions provider Accuity has expanded its global innovation team with two leadership appointments.

Neela Das has been appointed to lead the company’s global, multi-disciplinary innovation team, with regional hubs in London, Paris, Chicago and Singapore. She will be working with Ronald Hobbs, who has been appointed director of technology for innovation.

Das brings a wealth of experience working in disrupted markets. She held the digital director role at New Scientist, and as part of the senior management team developed its digital strategy. At Accuity, she will develop the innovation strategy, collaborating with the risk, compliance and payments business and technology teams across the globe.

Hobbs will lead the innovation team’s engineering experts, having been the technical brains behind Accuity’s dual-use goods trade compliance solution. He joins after multiple technical leadership roles within RBI International. As the industry has evolved so have the projects he has tackled, delivering everything from centralised matching and information retrieval systems to the secure cloud-based evolution of key software products.

Accuity’s innovation teams operate like startups within the larger organisation, working directly with clients to develop proof of concepts. Since 2015, the innovation team has tripled in size.

“Companies need to innovate constantly so they can respond to evolving regulation and new ways of working,” says Hobbs. “We look forward to creating cutting edge solutions for our clients. Going forward, Accuity will focus on utilising the latest technologies, such as distributed ledger technology, artificial intelligence, machine learning, predictive analytics and big data, to adapt to the rapidly changing and evolving financial landscape.”

The post Accuity grows global innovation team appeared first on Global Trade Review (GTR).

IBM and a group of leading food companies are taking a major step towards making food supply chains more transparent with blockchain technology.

The consortium, which includes Dole, Driscoll, Golden State Foods, Kroger, McCormick and Company, Nestlé, Tyson Foods and Walmart, has announced a collaboration with IBM to test the tech giant’s blockchain solution “to identify and prioritise new areas where blockchain can benefit food ecosystems”, according to a statement released today.

The collaboration will build on a successful pilot that IBM carried out with Walmart earlier this year. During the pilot, Walmart discovered that it took six days, 18 hours and 26 minutes to trace a package of mangoes back to the farm in the US where they were grown, whereas with blockchain this was possible in just a couple of seconds. In that time, the blockchain revealed not only the farm from which the mangoes originated – but the exact path they followed on the way to the retail shelves.

“What we demonstrated working with Walmart is that the technology works: blockchain is an effective way to address some of the issues around traceability and transparency that we see in the global food ecosystem,” Brigid McDermott, vice-president of blockchain business development at IBM Research, tells GTR.

The next step, she says, is securing mass adoption and engagement from across the supply chain, which is exactly what the parties are now attempting with this collaboration. “The next part is equally important: to ensure that the offered value proposition is compelling to all of the players – not just the retailers, but the buyers, the distributors, the growers, everyone – and that they get engaged, so that we have both the solution and the ecosystem.”

As reported in GTR’s recent cover story, blockchain is ideally suited for tracking and tracing the physical supply chain. The technology ensures that records cannot be duplicated, manipulated or faked, and because it allows data to be entered, shared and viewed across the supply chain, the goods’ journey from farm to plate is immediately visible and transparent to all parties.

Some fascinating developments are already underway, including projects that use blockchain technology to trace diamonds, wine, coffee beans, cotton, avocados and fish.

The specific focus of IBM and Walmart’s pilot was on how the blockchain can solve food safety problems (by allowing parties to easily trace a contaminated product to its source and ensure safe removal from store shelves), but transparent supply chains are vital for many other reasons, including meeting sustainability standards and combatting fraud and trade-based money laundering.

McDermott explains that the food sector, and food safety in particular, was a good place to start because the various players have a shared goal and are thus willing to work together to improve the system for everyone.

“The collaboration that we need to drive critical mass is really strong here. Nobody is happy when their competitors have food safety problems, because it raises questions about the food ecosystem as a whole. So everybody has the desire to solve the problem,” she says.

The food companies will now be testing out the IBM blockchain solution, but exactly how it will be implemented is still being decided, she adds.

In a statement, Walmart’s vice-president of food safety Frank Yiannas says the company is looking forward to expanding its initial work. “Blockchain technology enables a new era of end-to-end transparency in the global food system,” he says, summarising it as “equivalent to shining a light on food ecosystem participants that will further promote responsible actions and behaviours”.

In addition to food safety, IBM is involved in a range of other blockchain supply chain initiatives, including one with Maersk that aims to help manage and track the paper trail of millions of shipping containers across the world.

IBM was also recently chosen to develop Digital Trade Chain, a blockchain trade finance platform for SMEs, powered by Hyperledger Fabric 1.0.

The post Food companies unite to advance blockchain for supply chain traceability appeared first on Global Trade Review (GTR).

Gurucargo, an online logistics company based in Uruguay, will launch in the US next month, with the aim of cutting out “expensive middle-men” in the freight industry.

It is the latest online marketplace to attempt to take advantage of the antiquated and bloated shipping industry. As with the Hong Kong-based company Freightos, which launched last year, Gurucargo compares itself with travel platform Expedia, aiming for “no inflated broker prices or shady pricing, no paperwork and no delay in shipment due to price shopping”.

However, co-founder Andres Israel claims that unlike its competitors, it does not just focus on sea freight, but manages the delivery process from end-to-end, providing access to land and air cargo transit as well.

He tells GTR: “ The fundamental difference between Gurucargo and other similarly marketed platforms is that we aim to disrupt the industry by removing expensive middlemen, such as forwarders, allowing small businesses to book access to cargo shipping space directly. Additionally, we don’t focus on just sea-based cargo shipping, but provide an end-to-end solution that simplifies the booking of air, sea and land-based cargo shipping.”

Exporters and importers can access the system for free, with the company making its money from a 1% commission fee charged to the cargo shipping provider selected by the trading company.

The company is currently active in Uruguay, Brazil, Chile, Panama and Mexico and handles 1.5 million monthly transactions, with 15% monthly user growth. Despite the chronic overcapacity in the shipping market and historically low prices seeing established players go bankrupt, the US freight market is expected to grow significantly over the next five years.

“We believe that the timing of our launch could not be more opportune. There is no more clear symptom of the inefficiency of the industry when you have overcapacity and low rates, and yet there is still great frustration on the part of importers and exporters who cannot find consistent and reliable space on ships and are constantly arbitraged by expensive middlemen. We believe that through the application of disruptive technology we can bring stability of pricing and capacity to meet market demands and ensure the financial viability of the industry,” Israel says.

The post Uruguayan freight startup seeks to crack US market appeared first on Global Trade Review (GTR).

In August last year, UK company Provenance announced a scheme to track tuna on the blockchain. In this pilot, Indonesian fishermen sent a text on the company’s blockchain-based app every time they successfully reeled one in. The fish was automatically registered as a digital asset that had been caught legally and sustainably.

From an ethical point of view, tuna is doubly problematic for consumers. Yellowtail tuna is often eaten in sushi and sashimi dishes, yet it is an endangered species that should only be fished sustainably. Also, a lot of the tuna we consume is caught by slaves. Greenpeace describes working conditions aboard fishing vessels “as among the worst in the world, and that includes tuna boats”.

Provenance’s pilot uses blockchain technology to eradicate those risks. For one, the blockchain is immutable – which is a fancy computer science way of saying “can’t be changed”. The digital certification stays with the tuna fish until the point of consumption, when it obviously ceases to exist. This immutability means the “digital fish” cannot be duplicated, counterfeited or tampered with: its provenance is guaranteed. And because blockchain allows data to be entered, shared and viewed across the supply chain, its journey from line to plate is transparent and visible.

What may sound like a quirky science project is actually hugely important work. This was one of the early signs of how blockchain will change supply chains in the years to come.

Why is it needed?

Banks and companies are under huge pressure from consumers to meet sustainability standards. Regulators are clamping down on trade-based money laundering practices, with the Hong Kong government, for one, establishing ground rules for tackling this systemic problem. Blockchain technology can be used to ensure goods are both sustainable and authentic.

But perhaps more practically, using blockchain along with existing tech such as radio frequency identification (RFID), the internet of things (IoT), smart devices and GPS can help satisfy operational problems that plague supply chains everywhere.

“I would say that track and trace technology is at the heart of what we offer. It’s an immediate problem that companies encounter every day: they lose track of goods, and when they finally get a bill from the logistics provider there are lots of charges, and they’ve no idea where they came from,” says Rebecca Liao, vice-president of business development and strategy at Skuchain, a California-based company that builds blockchain solutions for supply chains.

In the trade finance industry, the chatter around blockchain has rightly been in line with the modernisation of an antiquated industry. At the GTR Australia Trade Forum in Sydney in May, Westpac’s global head of trade, Adnan Ghani, listed the three criteria blockchain must meet if it is to reach critical mass: instantaneous transactions, reduction in fraud, and being cheaper than existing proprietary technologies.

The sector is delivering a sea of proof of concepts, but critical mass is a dot on the horizon. Much greater progress has been made on the physical supply chain. Banks’ growing role in financing these supply chains exposes them to such developments. They will inevitably be taken along for the ride. Indeed, some
are already onboard.

Also at the Sydney forum, Digby Bennett, regional sales director at China Systems, described a project which used blockchain to ensure the authenticity of halal goods in the Middle East’s Islamic banking sector. These goods, financed through sharia-compliant processes, must pass through stringent checks in order to meet requirements, Bennett said. This is an arduous task that must be inspected at every port on the supply chain.

China Systems worked with Emirates Islamic Bank to write a blockchain solution that allows them to share this information with Islamic banks on a ledger, via the Dubai Central Bank. That way, they can see which goods are compliant, what financing has been issued and which banks are involved. A real-world need, met using blockchain technology.

Thomas Verhagen, senior programme manager at the Cambridge Institute for Sustainability Leadership (CISL) believes blockchain’s role in passing environmental and sustainability standards information up the value chain will help banks clean up their own portfolios.

He says: “In exchange for correct entry of such data, it will be possible to offer services to participants that are upstream in a value chain. An example of this could be providing valuable information, as well as financing, to smallholders in agricultural supply chains in exchange for correct data entry in the distributed transaction ledger of that supply chain.”

In the supply chain this process is well underway, covering goods from household to luxury. We spoke to those creating the most interesting projects to date.

Coffee

In the coffee industry, the demands on buyers and suppliers are high. Skinny-jeaned hipsters from Dalston to Williamsburg insist on exotic blends that must be sourced sustainably. And for the 125 million people that make a living growing coffee, it is essential that they get a fair wage.

With this in mind, US company Bext360 created a machine that grades the coffee beans grown on plantations in Africa, at farm level. The machine combines with a blockchain-based app developed by Silicon Valley company Stellar to connect farmers with an instantaneous marketplace, and more control over the price they receive.

Stellar co-founder Brit Yonge explains how it works. “In the coffee market the beans themselves aren’t priced until later on in the supply chain. They’re collected from the farmer and sent to the market, and actually graded later on. Bext thought: ‘How can we price these beans earlier on, upstream in the supply chain, so growers are capturing the value they’re grading?’”

The machine analyses the beans at the farm, and makes the weight and grade available to both potential buyers and sellers via the blockchain-powered app. The pair can then negotiate a fair price. But when Bext360 figured out how to grade the beans without taking them to market, they were faced with another problem: the transfer of value.

“That’s where we came in,” Yonge says. “Stellar is a blockchain solution. In this scenario, it’s a patented protocol that allows any asset to be represented as a token. Banks are excited by this because they can represent virtual reality currency as a token and not have to deal with a digital asset like bitcoin. In this case Bext were creative, they saw you can have tokens representing different grades of coffee. As the machine is assessing the quality of the beans, they can issue these tokens that essentially represent an IOU to the farmer. That’s the last part of the problem: how do you actually represent the value?

“We worked with Bext to allow them to issue these tokens. The app puts these transactions on the blockchain… You’re aware of whose beans have been assessed in whatever way, and that they’ve been paid, which is a problem in some markets where people are being robbed. You know that this person produces so many grade A beans and should be compensated as such.”

With legislation such as the UK Slavery Act in enforcement, this type of solution could offer buyers and lenders reassurance that their supply chains are clean of such practices. It’s the kind of real-use scenario that excites a nascent industry.

Collin Thompson, co-founder of Hong Kong-based blockchain company Intrepid Ventures, tells GTR: “These coffee beans are going to Starbucks anyway. It gets 10,000 of these small growers and they don’t know where they came from… What if there was an insurgency that took those beans over and it got into the supply chain? You want to be able to know how it got into the supply chain and if people are getting paid fairly.”

Cotton

Arguably the most ambitious efforts we encountered in researching this article were in the US cotton industry. As with most physically traded goods, the paperwork is arduous. “For a 40-container shipment of cotton, you’re talking a three-inch binder full of paper. And that’s a small shipment of cotton,” says Mark Pryor, CEO of The Seam, a commodities software company based in Memphis, Tennessee.

Traceability is another pain point. In order to work with high-profile buyers such as Levi Strauss, H&M and Gap, cotton must meet standards set by the Better Cotton Initiative – a multinational non-profit that promotes the use of organic cotton. These two needs in mind, The Seam has been working on a blockchain solution that will, in effect, “kill two birds with one stone”.

“We’re going to have a consortium-based blockchain initiative that will be available from field to fabric and everywhere in between. That’s why we came up with the ‘cotton blockchain’, not the ‘agri blockchain’. This is specific to cotton, and the nuances and idiosyncrasies that commodity presents. We’ve had a very positive response from all areas of that supply chain, from retailers, to spinners, banks, freight forwarders, to producers, gins, warehouses, merchants and everyone else to come together and work with us to make this a reality,” Pryor explains.

Of course, this won’t be the first usage of blockchain in the cotton industry – last year, the first cross-border transaction between banks using blockchain technology took place on a shipment of 88 bales of cotton from the US to China, involving Commonwealth Bank of Australia, Wells Fargo and Skuchain.

However, Pryor describes The Seam’s work as more of an ecosystem than a solution, given that it will include all areas of the supply chain. Three pilots are set to be launched, having successfully moved through the proof of concept stage: one for smart contracts, one for physical shipment of cotton, and one to enable retailers to track and trace the finished product.

The company has been developing the blockchain ledger in house and will start the three-pronged pilot in July, where it will be used to track and trace a real deal.

Pryor explains: “A lot of the pilots out there aren’t real. They take one little subset of supply chains and say they’re done on blockchain, but it really didn’t prove that the technology worked. It was something that was done in a room or maybe somebody took a piece of data and walked it across to another office. That’s not what we want to do.

“We want to do a real contract. We’ve already agreed with the parties, it can’t be disclosed at this point. But they’re major merchants, textile mills and players along the way. We’re going to do a real contract trade in July. Then we’re looking at the export shipment and documentation to process flow and all that, a digitised ledger for verifying information along the supply chain, that will happen in January.”

The timescale is dictated by the nature of the industry: cotton trades typically happen in July, and this will be a real trade, conducted alongside trades done using traditional processes.

Shipment occurs after the harvest, between November and January. Finally, the retailer will have visibility back over the supply chain by February, at which point they will have received a cargo of cotton, tracked from the farm, along the blockchain.

According to Paul Sam, who leads Deloitte’s fintech practice in China, a blockchain project reaches critical mass when two to three players in an ecosystem move first. “It’s like a snowball effect,” he tells GTR.

For the “cotton blockchain”, critical mass is something it already has. The Seam is partly owned by Cargill, Olam and Louis Dreyfus, three commodity trading giants. The initiative already involves the biggest cotton exporters in the world. The Seam is also talking with banks such as BNP Paribas and HSBC about getting involved. If the pilots go well, Pryor says, the support is already there to  roll it out on a fully operational basis.

Avocados

“Agri companies have an existential need,” says Collin Thompson at Intrepid Ventures. “There’s a compliance issue. If a bank launders money for Pablo Escobar, they pay a US$1bn fine and that’s it. But if you have a problem in the supply chain, in the food area, the government will shut you down!”

This “existential need” means food companies cannot afford to get it wrong when it comes to sourcing their goods. According to Rebecca Liao at Skuchain, blockchain can be applied to pretty much every product in the agri food space to ensure quality control. Skuchain has been working with companies looking to improve their traceability across the board, from dairy to fruit. In one case, Skuchain was approached by a commercial bank that finances commodity trading.

“Their problem is that their internal policy says you can only offer [the set] commodities price for this good. Take avocados for example,” she explains.

The bank is only able to offer the quoted commodities price for standard avocados, but what happens when the farmer says his avocados are organically grown, or they’re non-GMO. The bank has no way of verifying the provenance of these avocados. What, for example, happens if they got mixed up with a batch of non-organic avocados?

“They need some sort of track and trace technology that will allow them to offer a higher price for premium avocados and stop losing out on deals,” Liao says – and so Skuchain built them a solution that bolts onto their existing Enterprise Resource Planning (ERP) or Electronic Data Interchange (EDI) systems.

She explains: “The farmer would be the starting point. Using the Skuchain mobile app, the farmer would apply a code to the shipment of avocados. They scan that code using the mobile app. As soon as they do that they can get an encrypted POP code, which stands for proof of provenance, onto the blockchain ledger. That indicates to the ledger: now we have this unit that has been recorded onto the blockchain.

“There can be as much data as you want associated with that POP code. So the farmer would say it’s non-GMO, organically grown, the temperature he stores the avocados after they’re picked, their spoilage, etc. This can be done manually or using sensors that can provide this information – sometimes these sensors are more accurate than people.”

The POP code stays with the avocado throughout the supply chain, from the farmer, to the truck, to the shipping company, until it ends up as guacamole on a brunch plate in Singapore or Melbourne.

Liao continues: “We have unitisation technology on the back of the POP code, which means they can be subdivided, aggregated onto a master POP code. There are several ways you can manipulate this piece of encryption, but they will continue to track the goods all the way from point of origin to the hands of the consumer.”

Meanwhile, the only thing people involved see is a smartphone app. The blockchain is invisible, in the same way that most people won’t be aware that they’re using SMTP for email. This is one of the major advantages of distributed ledger technology: the investment is at the top of the supply chain. Everybody else accesses it through a smartphone or laptop, meaning its rollout to remote farms and plantations in, say, Indonesia or Tanzania, is relatively simple.

Diamonds (and wine)

Having spent the early part of her career working to make objects more traceable through RFID technology, Leanne Kemp knows a thing or two about supply chains. When she saw what people were doing with cryptocurrencies a few years back, solving issues around visibility, double spend and secure transfer of value, she had a “eureka” moment.

“Because I hadn’t come from a payments background, I looked at the technology in cryptocurrencies and started applying this to an object instead of a piece of money,” she tells GTR. By applying the same principles used in bitcoin platforms to physical assets, she saw how blockchain could be used in the physical commodities space. Everledger was born, and now Kemp is one of the most respected authorities on blockchain in the world.

Everledger is at the cutting edge of blockchain-based track and trace. The company has devised solutions that ensure the authenticity of high-value goods, such as diamonds, wine and fine art. Each of these markets faces crises of authentication, after being plagued by issues around counterfeiting and ethics. There are said to be more bottles of New Zealand wine on the market today than have ever been manufactured, while the problems of blood diamonds are well-documented.

“The marriage between provenance and procurement is a natural evolution towards transparency. With transparency comes sustainability both at an ethical trade level and from a financial point. Now we’re seeing governments pass legislation to ensure transparency and sustainability is incumbent upon directors and companies in the local market in the UK – you can reference the Slavery Act as one of those pointers,” she says.

Most notably, Everledger created a global digital registry for diamonds, powered by blockchain. The platform digitally certifies diamonds traced through the Kimberley Process – the global initiative established to stop conflict diamonds from entering the mainstream market. Diamonds may be “dumb objects” [aka those inanimate objects which are not smart – unlike modern mobile technology], but they lend themselves to such a solution better than, say, slabs of copper which are indistinguishable from one another.

Kemp explains: “The beautiful thing about white diamonds is the perfect bedrock, we can incarnate the physical object into the blockchain. We can extract 40 metadata points around an identity, and actually digitally incarnate that. Also, the diamond industry has control points. It uses certain types of science and scanning to then give the opinion of the expert, but also match that with machine.

While we’ve seen how blockchain can be used in areas such as food and textiles, Kemp says these supply chains are “complex” and perhaps don’t lend themselves as naturally to the technology as diamonds.

“We’re very disciplined about what we do, and applying it to items like art and antiquities, things that have generations, that need to consider provenance. We’re not really too excited about things like fish, or tracking perishable items, we think that can be best served by other companies.”

The post How blockchain is changing track and trace appeared first on Global Trade Review (GTR).

UniCredit has started testing with EBA Clearing’s pan-European, real-time payment platform RT1.

Customers in Italy and Germany will be the first to use the new payment method, due to be available from November.

Around 39 financial institutions are working on the development of the new infrastructure, which will provide a real-time payment processing platform, 24 hours a day, across the single euro payments area (Sepa).

Some 30 financial institutions are planning to connect to RT1 in November while another 70 banks are preparing to join in 2018.

Jan Kupfer, global co-head of global transaction banking at UniCredit says: “The introduction of euro-denominated instant payments will enable us to better support the payment businesses of both our corporate and retail customers.”

CEO of EBA Clearing, Hays Littlejohn, says: “Our aim was to provide the European payments industry with a fully-fledged pan-European infrastructure system from the start date of SCT Inst (Sepa instant credit transfer) and we are happy to see that RT1 meets the requirements of our funding banks as well as of a growing community of fast followers across the continent.”

The European Payments Council (EPC) proposed the idea of a Sepa instant payments scheme in November 2015 following shifts in consumer, corporate and retail expectations around payments processing. The EPC then published the legal framework and technical specifications for the scheme in November 2016, giving payment providers one year to go live.

Currently, Sepa credit transfers are processed in batches whereby a corporate will send payments to its bank at various times during the day, and all transactions will be submitted and cleared at the end of the day.

SCT Inst will be processed at a transaction level, for payments up to €15,000. As soon as a payment service provider recognises that the Sepa transaction is an instant payment, they will process and clear the payment in real time, with money visible in the receiver’s account within 10 seconds.

The SCT Inst scheme, which is not mandatory, will be available across 34 Sepa countries.

The post UniCredit kicks off instant payment platform tests appeared first on Global Trade Review (GTR).