American Express Co. (NYSE: AXP) began testing a blockchain version of its customer rewards program in May and is now going one step deeper into blockchain development with a patent application related to a proof of payment (PoP) system. The idea behind the system is to provide better evidence of payment transactions between merchants and their customers.
As described in the application, the PoP system comprises a processor, instruction memory and execution space that verifies a payment with a transaction amount and merchant identifier.
In the more precise language of the application abstract:
A proof-of-payment system may receive a payment confirmation including a transaction amount and a merchant identifier. The system may select a record from a registration repository by matching the merchant identifier to the record. The record may have a public key associated with the merchant identifier via a registration process, for example. The system may also generate a proof-of-payment payload comprising an identifier and a payment amount, and encrypt the proof-of-payment payload using the public key. The system may write the encrypted proof-of-payment payload to a blockchain maintained on a first blockchain node.
The system as illustrated in the patent application uses a single registration repository that could include payment network merchant identifiers for any payment card. That may be the main reason to seek a patent.
Managing the flow of processes on payment system blockchain is something that may best be accomplished by a single vendor for the simple reason that nearly 90% of all U.S. retail transactions are now done either with a credit or debit card, with debit cards steadily pulling further ahead of credit cards.
Being the first to weave together the parts of a blockchain-based PoP system could pay big dividends to American Express, but not for some time yet. Other big financial services firms are also going to take a run at this business. American Express wants to be first.
The company’s stock traded down about 0.1% in the late morning Monday, at $100.38 in a 52-week range of $83.33 to $103.24. The consensus 12-month price target on the stock is $109.68