Paystand will give corporate customers an end-to-end digital business-to-business payment platform.
The Japanese payment network JCB has signed a deal with the US blockchain-based commercial payment platform Paystand to provide the first end-to-end digital payment platform for enterprises and customers in Japan.
Paystand CEO Jeremy Almond said JCB's 130 million customers make it the largest payment processor in Japan and Korea, accounting for over 80% of all digital payment transactions. But on the business-to-business side, well over 90% of all payments in Japan and Korea are still being done through cash or paper methods, he added.
"The challenges faced by B2B companies across the globe are similar: they are burdened by a commercial payment infrastructure mired in pre-internet technology," said Almond. "As a result, they are saddled with a legacy system rife with costly transaction fees, manual processes, and delays. Our agreement with JCB is yet another indication that enterprises in all markets are demanding easy, secure, frictionless business payments that leverage digital technology."
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Business-to-business transactions in Japan account for nearly $10 trillion dollars in terms of annual volume, but just 1% of commercial payments in Japan are currently made through credit cards and an even smaller fraction are made through technology such as bank transfers.
These methods of transferring funds are slow and come with fees that cost companies hundreds of millions each year. Paystand's goal is to cut the costs using its blockchain technology and Payments-as-a-Service model.
"How do you make this magic money experience that we have on the consumer level, where you walk in the Starbucks and you're able to use your Starbucks app and money just automatically moves or you walk out of an Uber and when you get to your location, money just automatically moves," Almond said.
"We think that same thing should happen at the commercial level, and what blockchain smart contracts allows you to do is, when there is a contract that says your customers will pay you in 30 days after you deliver these goods and services, that money can move automatically. We think those are the kinds of trends that you will see in commercial finance in general."
As part of the agreement, Paystand will build a platform to speed up the time it takes for companies to receive payment and reduce the kind of fraud and errors that plagued paper-based systems.
"The solution will connect payers and suppliers over cloud-based payment infrastructure with real-time fund verification that reduces Days Sales Outstanding (DSO) by over 60% on average," the company said in a statement.
"Paystand's blockchain-based payment infrastructure records an immutable record of every transaction, eliminating the potential for intentional fraud. The entire payment experience can be branded and integrated directly into merchant's existing workflows," the company said.
Almond explained that the general reliance on paper checks was holding companies back from more efficient digital methods that could simplify the money transfer process and ultimately lead to enterprises getting their money faster. He likened Paystand's work with complicated commercial transactions to what Venmo has done for basic consumers-to-consumer transactions.
The end goal is to use the Payments-as-a-Service platform to help an organization's accounts receivable and accounts payable departments get their money faster, cheaper and in a more automated fashion. While Paystand does charge institutions to use their service, Almond said it amounted to less than traditional methods because of the removal of all other fees.
Christian Gammill, enterprise lead for Paystand, said partnering with JCB cemented the company's position as the leading payment technology in Japan and dramatically scaled its reach.
"JCB has a long history of innovation and we are excited to work together to bring digital transformation to one of the last frontiers of the enterprise — the cash cycle," Gammill said.
With Paystand, blockchain technology serves the "financial plumbing" for companies to create a more open infrastructure, which Almond said ultimately led to better delivering mechanisms that make products and services cheaper and more efficient for customers.
According to Almond, Paystand has more than 150,000 businesses in its payment network and is working with companies in hospitality, insurance, food and financial services.
"JCB is an iconic, globally recognized brand in financial services and we are excited to partner with them to introduce better business payment technology to their customers and other companies throughout Japan and Asia," Almond added.
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