Last week, Japanese credit card company JCB partnered with U.S.-based payments firm Paystand to build a blockchain-based B2B payments platform. The solution will digitize the current corporate SME payments system in Japan and for the 130 million customers of JCB.
Earlier this year, Japan increased its consumption tax but introduced a tiered system reducing tax on certain items to boost the economy. This requires businesses to account for payments for each tax rate separately.
In 2023, a new tax invoicing system will be launched where companies will be required to retain invoices to receive tax credits on purchases. Additionally, corporates will be required to furnish detailed information such as registration number, details of the purchase and applicable tax rates.
These changes mean all business will need to move to digitized solutions to conveniently file for tax credits. JCB and Paystand are developing a blockchain solution for corporates in Japan to make payments simpler and provide a trusted source of data.
The solution isn’t so much about using blockchain for payments. Instead, Paystand’s blockchain focus is on keeping records of all transactions in a tamperproof manner. It provides smart payments to allow payments to be triggered at specific times, certifies receipts and provides secure, auditable records. The firm also offers a blockchain notary service that can verify any event that a corporate wishes.
“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 Jeremy Almond, CEO of Paystand.
Almond added, “As a result, they are saddled with a legacy system rife with costly transaction fees, manual processes, and delays. Our relationship with JCB is yet another indication that enterprises in all markets are demanding easy, secure, frictionless business payments that leverage digital technology.”
JCB is one of the leading credit card issuing companies in Japan and had net revenues of $2.8 billion in FY 2018. As of March 2019, JCB cards can be used in 23 countries.
Meanwhile, Paystand was started in 2013 and has received $8 million in venture capital funding to date according to Crunchbase.
The announcement said the B2B payment market in Japan amounts to $10 trillion every year.
The blockchain B2B payments solution will connect sellers and buyers for real-time fund verification, and Paystand expects a reduction in Days Sales Outstanding (DSO) by over 60% on average. Additionally, limited manual processes will reduce errors and risk of fraud.
California-based Paystand provides several payments options such as eCheck, &ACH, debit cards and credit card through its blockchain solution. It currently provides integrations with ERP systems, eCommerce, mail, CRM and accounting systems. It is essentially offering enterprises software-as-a-service to enable payments-as-a service.
U.S. payments firm Visa launched its blockchain B2B Connect platform back in June. The platform leverages the existing Visa network and is currently operational in 62 trade corridors.
