Why South Korea’s Top Credit Card Firm Just Filed For a Blockchain Patent
Shinhan Card, the biggest credit card company in South Korea operated by Shinhan Bank, the nation’s second-largest bank, applied for a new blockchain patent in Japan. It comes 16 months after the firm received approval for a blockchain credit card patent in South Korea.
Local publications report that Shinhan Card’s patent details a technology that uses the blockchain to process credit card payments.
Shinhan Card applying for a blockchain patent in Japan is a highly optimistic trend for both the crypto and blockchain industries for three key reasons.
First, it shows that Shinhan Card plans to expand the use of blockchain technology across international markets. Second, it sets a precedent for the broader financial sector to embrace the blockchain. Third, it could improve the perception of the cryptocurrency industry in South Korea.
Shinhan Card is Fueling the Adoption of Blockchain Technology
Previously, South Korea’s financial sector refrained from using blockchain technology other than for certain transactions or identity verifications.
Several major banks, like Nonghyup, integrated the blockchain to carry out minor tasks. For instance, Nonghyup launched an internal blockchain platform called “Decentralised Identifier” for its employees.
The service allows employees to verify their identities through a blockchain-based application. With it, employees can check-in and out of the office, recording the time they start and end their work.
In the future, Nonghyup said that it plans to expand the service to allow employees to make reservations and payments.
But, major financial institutions are yet to deploy large-scale operations on top of the blockchain. Most blockchain-based platforms are still experimental and internal, operating at a relatively small scale.
Shinhan Card is taking a different and a more ambitious route. The recent patent filing describes a platform that can process credit card payments, settle transactions with merchants, and calculate credit limits on the blockchain.
The primary benefit of utilizing the blockchain would be that it would eliminate the need for intermediaries between the credit card company and the merchants. Without intermediaries, the settlement of payments and communication between credit card companies and merchants would become more efficient.
Yoo Tae-hyun, the general manager at Shinhan Card’s Digital First, said in a statement translated by 8BTC:
“Blockchain credit transaction system is a blockchain-based mobile credit card processing service. Based on the circumstances in South Korea and in foreign markets, the company will provide an innovative consumer experience through efficient and secure services.”
One reason Shinhan Card is approaching blockchain technology with more enthusiasm than other financial institutions might be Shinhan Pay.
The Shinhan Financial Group, which owns Shinhan Bank, Shinhan Card, Shinhan Pay, and many other subsidiaries, encompasses many industries within the broader financial sector.
Alongside KakaoPay, Shinhan Pay remains the most utilized mobile payment applications in South Korea. If users can use both Shinhan Card and Shinhan Pay on a unified blockchain platform, it would create significant synergy between the two.
The financial sector has become increasingly digitized in recent months, particularly as global consumer behavior shifts from offline to online. Consequently, the perception of cryptocurrencies and blockchain technology has considerably improved, garnering the interest of institutions.
For instance, PayPal, the $247 billion payments conglomerate, is allowing its hundreds of millions of users to buy and sell cryptocurrencies on the platform.
Over the longer term, the entrance of leading financial institutions, such as Shinhan Card, PayPal, and Square, into the blockchain and cryptocurrency sector would likely encourage other large-scale financial institutions to consider a similar strategy.