JP Morgan revealed that Ant International, the affiliate of China’s Alipay, has processed billions of dollars in transactions using JPM Coin. The revelation came as part of a whitepaper on programmable payments released by Onyx by JP Morgan and the MIT Digital Currency Initiative.
Ant supports payments for 1.2 billion buyers and 2 million sellers in over 200 countries. Both Siemens and Ant use the JPM Coin blockchain-based bank accounts for their internal treasury functions. Ant’s in-house system monitors liquidity usage in real time across the globe and triggers payment instructions accordingly. Typically any excess funds will be parked in higher yielding instruments.
The company has its own Treasury Management System that combines blockchain and AI programmable triggers. However, it uses blockchain technology that is different from JPM Coin, so they communicate using APIs.
JPM Coin enables “efficient fund transfers across our global financial hubs while simplifying reconciliation efforts,” said Kelvin Li, Head of Platform Tech, Ant International. “Programmability has allowed us to implement automated treasury functions, such as dynamic funding and zero-balance management, enhancing our operational efficiency and financial performance.”
Apart from treasury management, other use cases highlighted include automated payment through third party logistics providers and automating the process of funding margin requirements in capital markets.
JPM Coin features
The whitepaper also delves into some pros and cons of using smart contracts for programmable payments. Without smart contracts, large corporations can automatically check balances and send instructions to JP Morgan via messaging. However, having the triggers, logic and action within the same environment improves response times. Additionally, smart contracts are composable, which could enable more complex use cases.
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On the flipside, given code is deployed within a payment system, one of the challenges is how expressive or flexible the programming is allowed to be. If there are code bugs, the impact could be costly. Hence, it’s desirable to restrict the programming options for risk management purposes, but this also limits the potential of programmable payments. So there’s a trade off.
While the private Quorum blockchain that underpins JPM Coin is currently entirely controlled by JP Morgan, it is designed so that corporate clients could host nodes connected to the platform in future.
However, only part of the JPM Coin platform is DLT-based. It records balances and balance updates on the blockchain. The payment execution, such as linking to other JP Morgan systems or compliance processes, is performed off chain.
Meanwhile, at the Consensus event in May, Umar Farooq, the former lead of Onyx by JP Morgan said that transactions had exploded since JP Morgan enabled the programmability feature.
