Here’s what the nation’s largest bank, JPMorgan Chase, envisions for the next phase of e-commerce, according to a patent filing published just a few days ago which describes a “new paradigm” for online payments.
Imagine paying for some product in a transaction directly with the seller that doesn’t include a costly third-party fee or the revelation of a personal account number — the current components that comprise credit card and debit card purchases.
Imagine this system with a “real-time digital exchange of value.”
And imagine that you can archive all the transactions in a personal digital wallet, with its own “Internet Pay Anyone (IPA)” account and inherent safeguards built-in, something that you could call “Virtual Private Lockbox (VPL),” according to JPMorgan’s patent.
If this “web cash” system — as JPMorgan Chase calls it — seems familiar, it should. It smacks of the peer-to-peer transactions of bitcoins and other cryptocurrencies that increasingly are making the world’s biggest banks uneasy about the future of e-commerce.
The patent, first revealed by LetsTalkBitcoin.com, is a fascinating look into JPMorgan’s veiled outlook on the evolving but growing bitcoin universe, and other more widely-accepted payment systems.
JPMorgan’s proposed system offers another eerily familiar component, which seemingly mimics “blockchain,” a publicly available, permanent ledger of bitcoin transactions.
Here is JPMorgan’s version: “The method further includes freely publishing the payment address and making it available to users of an internet portal or search engine.”
Without naming the virtual currency or any competing payments system by name, the bank takes a swipe at the crytocurrency model.
“None of the emerging efforts to date have gotten more than a toehold in the market place and momentum continues to build in favor of credit cards,” according to Chase’s patent application published by The United States Patent and Trademark Office (USPTO). It was filed August 5th, 2013.
By no means is JPMorgan Chase — the largest credit card issuer — about to support a system that does away with credit and debit cards. But it concedes that the current card payment mechanism, utilizing the Electronic Transfer Funds (ETF) system, has its drawbacks, particularly high fees for lower-priced transactions.
“The relatively high fees support the credit card business model,” the patent application states. “While credit and debit cards may continue to be a viable payment option for merchants selling relatively high ticket items over the Internet, credit and debit cards are not economically viable for purchases of lower cost items.”
JPMorgan Chase sees “a new marketplace” emerging for “low dollar, high volume, real-time payments with payment surety for both consumers and producers.”
As LetsTalkBitcoin.com points out, “Bitcoin has also been ballyhooed for it use with micro-payments and payments under ten dollars due to its zero to negligible fee structure.”
JPMorgan Chase: “The present invention further enables small dollar financial transactions, allows for the creation of ‘web cash’ as well as provides facilities for customer service and record-keeping.”
Read the full patent application.