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Blockchain can Help Secure Contactless Payments

James Robertson, Banking CIO Outlook | Tuesday, May 18, 2021

Blockchain is a distributed database system that stores and preserves a list of real-time transactions. Records on the blockchain are time-stamped and protected by high-level data encryption, rendering them irrefutable and tamper-proof. Consider the case of a cash note that comes with an encrypted data ledger.

Fremont, CA: Whether it's mobile payment applications like Alipay or online payment systems like PayPal, the global payment industry has seen tremendous growth in recent years. This expansion can be attributed to technologies such as Near Field Communication and Radio Frequency Identification, which allow payment devices to communicate information and thus enable contactless payments.

These systems operate by embedding a chip in a computer, which allows for instant payments by waving or tapping it over a reader. Since the reader and computer communicate through radio waves, they must be in near proximity in order for the transaction to take place.

Enter Blockchain Technology

Blockchain is a distributed database system that stores and preserves a list of real-time transactions. Records on the blockchain are time-stamped and protected by high-level data encryption, rendering them irrefutable and tamper-proof. Consider the case of a cash note that comes with an encrypted data ledger. It keeps track of every transaction it has made over the course of its existence. You have the entire transaction history with you when you receive the note. You will decide whether or not the person handing you the note is worth doing business with. This is what blockchain provides. It adds an extra layer of trust and protection to a transaction, ensuring that all parties are secure and happy.

Customers will check if the vendor they're working with has been fair or dishonest in previous transactions by using a blockchain contactless payment system. This is possible because the system can keep track of all cases of merchant fraud and share this information with potential customers to keep them updated. Since the data is stored in an encrypted ledger, the merchants are not able to change it.

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