Chinese fintech giant AliPay has launched a blockchain-driven system for international money transfers that promises to dramatically reduce the cost of overseas remittances.
AliPay has teamed up with Filipino fintech company GCash to use blockchain technology to facilitate cross-border money transfers between Hong Kong and the Philippines.
On 25 June a Filipino national referred to by China’s domestic press as “Grace” became the first person to use the blockchain system to conduct a cross-border remittance via the system, with the entire process taking just three seconds.
Standard Chartered is providing settlement services to Alipay Hong Kong and GCash,as well as discount exchange rates and transaction fees, in order to support the immediate transfer of funds between the systems.
Ant Financial CTO Cheng Li said to 21st Century Business Herald that the remittance system uses the distributed ledgers of the blockchain for cross-organisational coordination between AlipayHK, Standard Chartered’s offices in Hong Kong and Singapore, as well as GCash in the Philippines.
“It’s the same as a relay race,” said Cheng Li. “We can change from a remittance model that confirms transfer step by step at each node to one which performs real-time, simultaneous operation, thus raising efficiency.
“At the same time that the side performing remittances issues money, all participants simultaneously receive this information, and after perofrming compliance and other required inspections, the blockchain coordinates all parties to simultaneously complete the remittance procedure.”
Alipay has seen roaring growth in Hong Kong after first launch its ewallet in May of last year, with AlipayHK chair Hou Jianing (霍建宁) indicating that the company already had 1.5 million users in Hong Kong and ties to over 20,000 vendors.
Alibaba Group founder Jack Ma said that blockchain technology had the potential to eventually cut the cost of cross-border remittances via the system to next to nothing.
“Blockchains should not be a tool for creating overnight wealth, but instead be used for solving social problems,” said Alibaba Group founder Jack Ma at press conference held on 25 June.
“[Blockchain] technology itself is not a bubble….bitcoin perhaps is a bubble.
“Ant Financial is the company with the largest number of blockchain patents in the world, yet it doesn’t hold a single bItcoin. ”
Ma said that Ant Financial spent the past six months focusing on the development of a blockchain system for overseas remittances, and after trialling the technology in Hong Kong plans to eventually bring it to locations around the world.
“At present there are 1.7 billion people around the world who do not have bank accounts, but the vast majority of them all own mobile phones.
“In future blockchains could have an impact hon humanity which is much, much greater than we’ve imagined.”
Alipay is not the first Chinese financial company to make a foray into the use of blockchains for cross-border remittance purposes.
In the second half of 2017 China Merchants Bank teamed up with its Hong Kong subsidiary Wing Lung Bank to use a blockchain-based system to conduct cross-border renminbi remittance operations.