Victor Ugochukwu · Dec 14, 2020 . 5min read
Spanish Banks Complete Smart Contract for Payment Test
The test facilitated the execution of 20,000 payments with seven participating nodes.
By Victor Ugochukwu · Jul 16, 2020 . 6min read
A recent publication by finextra shows some Spanish banks have successfully completed testing out a smart contract for programmable payments.
Five top Spanish banks participated in this exercise. They include Banco Sabadell, Banco Santander, Bankia, BBVA and CaixaBank. They tested a proof-of-concept version of automated payments that a smart contract triggers across blockchain networks.
This initiative dubbed red-i is led by Iberpay. Iberpay is the body which oversees the coordination and management of Spanish payment system (SNCE). Upon deployment, as typical of smart contracts, the tool helps banks with the automatic execution of payments. Areas such as signing a contract or execution of automatic payments upon receipt or shipment of goods by smart contracts. This happens as long as certain preconditions are met.
Red-i smart contract can facilitate a transaction every 2.5 seconds
The test facilitated the execution of 20,000 payments with seven participating nodes. It took each transaction an average of 2.5 seconds for completion. This is typical of smart contracts which run on the blockchain through nodes.
Iberpay hinted on the successful test on a business case as it deployed a smart contract for the management of bank guarantees automating the issuing, registering, executing and cancelling customer bank guarantees. The test went further by adding a ‘notary participant’ which can simulate a State or Court injunction. Subsequently, upon meeting any preset condition, it approves the execution of the guarantee. Subsequently, the smart contract then automatically triggers payments.
Surely, this Spanish banks test is a welcome development proving how resourceful and powerful the smart contract as a by-product of the blockchain technology can be. With banks eyeing the decentralized ledger technology space and contemplating a launch of central bank digital currencies, smart contracts should see improved usage within the commercial banking sector.
Iberpay is determined to broaden the use case for red-i using API to connect non-banking networks or mixed networks. Besides helping banks reduce cost in areas where the smart contract brings inefficiency, this will promote improved transparency and thereby trust within the system. This is a value proposition of most decentralized ledger technologies.