Shinhan Card, the card affiliate of Korea’s Shinhan Financial Group, has become the first card company in the world to successfully develop a blockchain-based credit and payment system.
Shinhan Card announced Monday that it had acquired a Korean patent for a blockchain-based credit payment system, which would include a mechanism for generating and managing virtual currency credit.
According to Korean-language reports, including this one in the Maeil Gyeongju, this is the first time anywhere in the world that the credit transaction process has been realized on blockchain.
Shinhan Card reportedly obtained the patent after a year and a half of feasibility studies and technical trials.
Shinhan Card has applied for patents in the United States, Japan, China, the EU, Vietnam, Indonesia and elsewhere.
The technology lets users realize credit transaction processes on a blockchain base, including setting your credit limit, paying monthly installments and completing payments to merchants. A Shinhan Card official said, “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 patent also includes a cardless mobile payment process that would let you pay with your mobile phone without a credit card and an app-to-app payment process that would enable payments between applications without a VAN or PG.
In particular, Shinhan Card employed a Multi Signature, Multi Account method that would allow AI speakers, automobiles, refrigerators, washing machines and other household appliances — including, presumably, your toaster — to make payments within the user’s credit limit.
The card company appears to have adopted this approach with the Internet of Things in mind. The Maeil Gyeongju says Shinhan Bank has developed the technical base for, say, a car connected to a customer’s credit limit to automatically pay for gas or parking, or for a gas meter to automatically pay the gas bill.
The patent included some nifty diagrams that Korean-language blockchain news site Blockinpress included in its report too.
Blockinpress notes something else. Shinhan Card’s patent includes a mechanism that would generate cryptocurrency according to the customer’s credit limit.
To be sure, this cryptocurrency differs from something like Bitcoin in that it would be generated to ease transactions within the network.
Still, the patent could influence whether the overseas remittance provider Moin eventually gets approval to play in Korea’s regulatory sandbox. Moin, too, uses a digital currency as an intermediary step, in this case between it and its partner companies during the remittance process.
As we noted in yesterday’s post, the Korean authorities have been hesitant to do anything that appears to be giving an official stamp of approval to cryptocurrency.
Maybe Shinhan Card’s patent means that is about to change.