JPMorgan Adds Programmable Payments ‘Holy Grail’ to JPM Coin

Banking giant JPMorgan has added a programmable payments feature to its blockchain-powered payment system, JPM Coin.

The new feature enables companies to automate the transfer of funds based on preprogrammed conditions, enabling them to seamlessly move funds to cover financial obligations such as overdue payments and margin calls.

“When we talk about digital currencies and tokenized deposits, the holy grail has always been the ability to program payments,” Naveen Mallela, the head of Coin Systems at JPMorgan’s blockchain division Onyx, told Bloomberg.

Programmable payments could be used by companies to earn more income on deposits in the prevailing interest rate environment, Mallela explained. “When rates are close to zero, treasurers are less bothered, but when rates are 5.5% or rising, that is when all these capabilities start becoming more attractive.”

Blockchain already enables instantaneous transfers to be conducted at any time of day, versus the batched transfers employed by traditional finance. The new system also eliminates the need for standing orders, triggering transfers when predetermined criteria are met. JPM Coin runs on a permissioned blockchain, a distributed ledger that isn’t publicly accessible; JPM Coin is limited to JPMorgan’s institutional clients.

The new technology has already been employed by German multinational Siemens AG, which this week configured its accounts to automatically transfer funds to address potential shortfalls.

“If you think of the current bank account provided by any financial institution, there is only so much you can do in terms of configurability and set of rules,” said Mallela. “We believe this is the first instance of a traditional financial firm building programmable payments at scale, using existing commercial bank money.”