Enterprise blockchain technology is a relatively new tool and companies are still working out ways to put its unique features to good use.
While there are plenty of dubious claims for what enterprise blockchains can do, getting up-to-date advice on how it will fit exactly is still difficult to find. Find out more in this e-book and learn if a blockchain is suitable for your business.
Payment gateways are becoming more and more important players to improve the shopping experience and effective payment gateway integration is ever more vital. Credit cards, one-click payments, instalments, recurring payments, refunds, withdraws, digital wallets, invoice payment links — it’s good to have these technologies integrated into one place. Customers don’t want to remember multiple login credentials, and merchants are not happy digging through complicated system integration guides. Both sides want faster, easier and more secure operations.
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Every payment method provides various integration guides. Starting from tutorials and frequently asked questions, going through software development kits tailored for the most popular programming languages and ending with a comprehensive API reference for developers. Dedicated people have to carefully study all these materials.
Most payment methods will have limited availability by countries and regions. They can be subject to different regulations that can cause transaction limits, limited functionality or additional formal requirements.
An example can be offering recurring payments for markets around the globe. Subscription models are very convenient for customers and merchants, but they usually require additional development work. Acquirers will expect you to distinguish all transactions made within a specific recurring payment plan from ordinary, one-time e-commerce transactions. A subscription plan is an agreement between a customer and a merchant. Your job is to keep track of that agreement by providing the initial transaction ID. Mexico’s Banamex also requires providing a unique contract number for every payment plan. If in doubt, always contact a support person from the payment provider’s side.
Payment solution providers will expect you to ensure the best security level possible. For example, PayPal provides extensive “Security guidelines and best practices” in their developers portal. One of the most common security measures is using the latest encryption protocols, maintaining anti-phishing processes and regular security audits.
The basic requirement for a modern payment platform is using secure communication protocols. In 2020, the minimum version for transport layer security — TLS — is 1.2. Industry security experts have long considered older protocols — especially secure socket layer, or SSL — vulnerable. Payment methods will not accept connections using vulnerable protocols.
PayPal, along with many other providers, dropped support for TLS versions older than 1.2 back in 2016. It happened after the company discovered several serious vulnerabilities like POODLE and Heartbleed. Hackers could exploit these and breach the system. Also, the SHA-1 cryptographic algorithm is discouraged in favor of a stronger SHA-256. Security best practices change rapidly as new software versions emerge. Staying ahead of all these changes and setting them up is a huge challenge.
Internet protocols change frequently in response to threats. The best practice is not to hardcode a specific version, but to let the software negotiate the highest version available. This can happen automatically, but still, your DevOps team has to be up to date with recent security news. Most payment providers will help you by sending informative and warning emails. Do not ignore any of them and set up any development or maintenance work immediately instead of rushing just before a deadline.
Apart from staying up to date with payment method news, you should take your own actions to reduce systems vulnerability. Check your integration standards against industry best practices at least once a year. Introduce anti-phishing processes and monitor spoof sites which could lead your clients to pass their sensitive data to scammers. Warn your customers and accept spoof site reports from them.
The payment industry often relies on professional security tools from reliable sources like iDefense or Veracode. These companies provide software for automatic known vulnerability scans, which it categorizes by severity. These scan reports often come with proposed solutions and even time estimates. Combined with development and continuous integration plugins, these tools bring invaluable help to your product team.
Security considerations are vital if you deal with customer credit card details. This includes not only the classic scenarios when a customer enters data directly in your form but also some electronic wallet solutions like Masterpass. This is even more important while using its express checkout functionality where a customer consents to share data without even logging into their Masterpass wallet. Other wallet providers like Apple Pay try to mitigate the risk by using payment tokens instead of actual card numbers.
During onboarding, all payment companies will provide sandboxing environments for development and testing. First, you receive a test environment account with a public/private key pair, and then login credentials. Your developers and quality assurance team can test all the integration scenarios.
Some providers, like Apple Pay or Trustly, will also perform additional acceptance tests for both frontend and backend integration, domain verification, and so on. Part of EVO Snap the mandatory certification process is to run test scripts in your application and send results to the certification team. Then, after receiving approval, you will be provided with live credentials.
Make sure no data gets between your test and live environments. It would be very unprofessional for your customers to see some random test records. Even worse, your development team should not see any production data unless explicitly allowed.
In addition to making transactions with test cards in a sandbox environment, you might need to perform some transactions with real cards in a production environment.
Integrating your payment system with external solutions is a two-way integration. Not only your application is going to send payment requests, but it also has to accept and respond to any notifications and feedback from a payment solution. The most obvious example is a notification confirming or rejecting payment. If a particular payment method does not receive a valid answer from your system, it will likely raise a warning.
Read the documentation carefully to learn what contact attempts you can expect from a payment method and how to respond.
Every payment method provider can introduce changes in their APIs. Some of them do not break compatibility with existing integrations, some others do. These changes may occur due to different circumstances — either new business functionalities, new market regulations or simply removing obsolete procedures.
Of course, such updates are always announced in advance. Watch out for any announcements from your payment method providers. Do not ignore them! If they sound too technical for you, forward them immediately to your payment gateway integration development teams and ask for explanations. Usually, companies allow their clients at least six months to adapt. But time flies, so schedule an update as soon as possible.
Sooner or later something will go wrong. Your customers will file complaints and your team will have to respond quickly. It is crucial to prepare for such cases by logging all communication with payment method APIs, so the team can perform a proper investigation.
What to log? Your software should at least query the exact API version of each payment method. This is basic information while reporting problems to a payment method provider. Every piece of information exchanged between your application and the API also has to be logged. Developers have to make sure that all the logs include transaction identifiers so that the support team can easily find all information related to that particular transaction.
However, excessive application logs are very difficult to browse. Your team has to use a log aggregator or browser which allows them to quickly find relevant information. Most log aggregators, like Logentries or Papertrail, are paid software-as-a-service platforms. The cost will be related to the velocity of the logs. While choosing a proper solution, analyze different payment plans. You need to be prepared for sudden spikes in application usage. Other solutions include hosted or self-deployed ELK Stack.
While it may sound unnecessary to invest money in yet another development or support tool, it is going to pay off quickly. For payment gateway providers, it is crucial to have a fast incident response time. Your support team needs a reliable tool to identify the root cause as soon as possible.
Payment gateways bring huge value to the market by simplifying payments for customers and merchants. Payment gateway integration with the payment methods your customers are using improves the UX and overall usefulness of the app. It is a payment gateway vendor’s job to ensure proper integration with payment method providers where every solution has a separate set of requirements. With more and more payment solutions coming, customers and merchants will put even more trust in payment gateways.
The article was written by Piotr Horzycki, Java & PHP developer at Espeo Software. To read more pieces by Piotr, you can visit his website or his LinkedIn profile.
Despite this increasing investor and market interest, nevertheless, sustainability accounting is something of a work in progress. Blockchain technology is already having a significant influence on traditional accounting functionality, but the link between sustainability, blockchain, and accounting deserves further analysis.
In this article, I will discuss how blockchain technology drives sustainable accounting through sustainability reporting, operating in an environmentally sustainable way, transforming carbon and other environmental markets, creating new sources for sustainable finance, reducing transactional complexity, incentivizing circular economies, and connecting the bottom line to everything else going on in a company. But before that, let us briefly look at how sustainability goes beyond risk mitigation.
While firms have long-established the business risks brought by issues such as scarcity of raw materials, air and water pollution, and climate change, and the essence of minimizing those risks, companies are only now starting to understand that sustainability is more than risk mitigation.
Done well, sustainability-driven programs- improving energy efficiency, rethinking supply chains, and transforming business models- have the potential to drive competitive advantage, innovation, and revenue growth.
But few companies realize the full extent of these benefits today: a majority of companies all over the world need a better understanding of how sustainability can be translated into various types of business value, and how they can effectively evaluate the return on sustainability-driven initiatives before they can achieve this potential. Only then will such companies establish the business model they require to accelerate and deepen the integration of sustainability into business strategy and operations.
Research has shown that companies with integrated, organization-wide sustainability models have better borrowing and revenue outcomes than their peers. These firms also consider revenue growth as the primary driver of their investment in sustainability.
Blockchain technology can have an intense effect on development-based investment, not only by revolutionizing international payment systems but also via improvements to access to finance, supply chain management, and digital identities. This influence goes beyond traditional financial services and business processes and extends to other essential sectors, like agriculture, healthcare, and transportation.
How can blockchain technology create new revenue opportunities for the accounting and financial service workforce? Precisely, how can specialists connect the seemingly distinct forces in sustainability, increasing accounting interest in this industry, and blockchain technology itself?
One of the greatest and often quoted problems with sustainability accounting is that businesses do not always reveal non-financial information with the same energy as financial information. This can be even more noticeable and significant concerning sustainability information, which drives bottom-line performance, and exposes the company to significant risks if it ignores defilements.
Blockchain technology fundamentally requires that all participants of the network communicate in an almost natural and transparent way. This implies that information concerning sustainability projects, not forgetting those with a financial orientation, like GE’s Ecomagination and those with an operational angle, like Coca-Cola’s Water Stewardship program, can be revealed, eliminating some of the dirtiness often associated with sustainability.
Blockchain’s data transparency not only facilitates collaboration between business parties but also fosters trust between businesses and consumers. For instance, the food and beverage industry faces rigorous compliance regulations that encompass everything from proper farming, processing, packaging, transportation, and storage of food- all meant to prevent foodborne diseases and strengthen the increasingly international food system.
There are several models currently available in the market that try to link sustainability initiatives and financial outcomes. Integrated accounting, other multiple models, put in place by accounting associations, and business-specific projects, all exist. The issue is not the lack of standards, but rather the absence of a consensus as to what should comprise measures.
Smart contracts, in and of themselves, symbolize a perfect initial step towards creating standard and implementable protocols for executing businesses. Accounting for sustainability is not an exception but a priority.
If the information is uniform, and leveraging on the first point, deliberated transparently, accounting practitioners can enjoy the detailed conversations needed to develop and improve full sustainability accounting standards. Importantly, such standards can be used across other areas of the economy, compared to the restricted protocols.
Blockchain technology can provide cryptographic tokens with a tradable value to improve existing market platforms for carbon (or other substances) and create new opportunities for carbon credit transactions.
A good case study is China’s Carbon Credit Management Platform, undertaken by Energy Blockchain Labs and IBM. The goal is that with the introduction of smart contracts, the transparency, auditability, and credibility of the Chinese carbon market will improve. In the future, blockchain could support an international carbon trading market for individuals, households, and companies.
Blockchain-based finance platforms could potentially revolutionize access to capital and open up a whole new class of potential investors for projects to tackle environmental problems, from investment in green infrastructure projects to facilitating blended finance or charitable donations for developing nations. More broadly, there is the potential for blockchain to bring a system change from shareholder to stakeholder value and from traditional finance capital to accounting for social, environmental, and financial capital.
This is probably the most exciting point for accounting experts desiring to create a business case about sustainability and technology. At the center of the growing technological integration, in the form of artificial intelligence (AI), blockchain technology and automation, financial services companies, and accounting businesses, in particular, are always looking for extra revenue lines.
The increasing interest in sustainability, besides indicating a reporting change, is also a chance for forward-thinking businesses. Clients and customers, both current and potential, are going to be held accountable by various stakeholder groups interested in how the company is performing, and how the company is getting those outcomes. Professionals with the ability to connect these dots, between blockchain, reporting, and sustainability, are going to be well-positioned to benefit from this prospect.
Blockchain technology, at least in the finance and accounting industry, is often regarded in equal measures of excitement and anxiety as it further hastens and magnifies the trends toward automation and eradication of traditional accounting roles. That said, only thinking about the potential of blockchain from the perspective of enhancing attest assets and tax roles overlooks the several opportunities blockchain can help create.
Financial transactions involving massive, cross-border sustainable development initiatives are becoming increasingly more complex, causing backlogs and delays. Blockchain-based platforms (crypto exchanges) and processes can handle multiple transactions more effectively.
This implies that sustainable projects and other climate-related activities will be more appealing to investors.
According to a report from the World Economic Forum, “Blockchain-based platforms and processes can seamlessly handle a wide range of stakeholders working in various capacities on different projects globally. It will enhance efficiency, minimizing transaction and make climate-related, infrastructure, and other sustainable initiates more attractive for private investments.”
Blockchain could completely change the way materials and natural resources are valued, handled, and traded through incentivizing people and companies to establish financial value from things that are currently wasted, discarded, or treated as economically invaluable. This could drive widespread behavior change and help achieve a truly circular economy. For instance, Plastic Bank has come up with a social enterprise that offers financial rewards in the form of cryptographic tokens in exchange for depositing collected ocean recyclable wastes.
Sustainability reporting, functioning in an environmentally sustainable way, transforming carbon and other environmental markets, creating new sources for sustainable finance, reducing transactional complexity, incentivizing circular economies, and linking the bottom line to everything else going on in the firm are trends likely to grow only more significant moving forward. Blockchain technology, already accelerating change in the accounting and finance sectors, can also open the doors to new opportunities for people and businesses eager to embrace these changes.
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One thing that categorizes developing countries is inadequate access to banking. Individuals and small businesses would like greater access to financial services currently unavailable trough traditional finance. High levels of mobile coverage and new disruptive payment apps such as Bitpesa offer new solutions.
Blockchain technology is a digital, distributed, immutable transaction ledger that eliminates the need for intermediaries. By doing so, it provides several opportunities for cost savings while opening new market segments for existing financial institutions and new players alike.
While developed markets experience exponential growth and advancements, the chances of emerging markets competing fairly with them on a global scale seem bleak sometimes. Nevertheless, the introduction of blockchain in emerging markets has reopened the prospects of a revival in these nations. Some of blockchain’s use cases can improve payments in developing countries by reducing remittance costs, enhancing financial inclusion, and eliminating corruption loopholes.
But before that, let us briefly discuss how blockchain technology drives efficiency in existing businesses and how it creates new markets in developing countries.
Much of the attention surrounding blockchain technology is from developed countries, especially in the payment sector, where the technology will likely have a significant impact because of its power to minimize payment costs. This has led some to reassess micropayments as a viable model, for example.
As a result, distributed ledger technology is heavily linked with financial institutions that deal with process efficiency services. These companies have started using blockchain-based solutions to solve specific issues or improvements in their business models, such as data reconciliation, supply chain tracking, clearing, and internal settlements.
Meanwhile, some international banks and financial intermediaries have partnered with blockchain firms to explore applications that apply to their business models and learn how this revolutionary invention may improve their legacy infrastructure. They are also considering consortia to leverage development and potential transition expenses and to raise the standard of blockchain technology.
Many corporate projects so far have embraced private blockchains, such as the Linux Foundation’s Hyperledger Fabric, as companies try to weigh the pros and cons of the revolutionary technology and retain the integrity of their existing business models.
The Post-Trade Distributed Ledger Group brings together international banks, custodians, central security depositories, and central banks from all over the world to share information and concepts on how blockchain technology can positively influence the post-trade landscape.
Blockchain is a disruptive technology that can re-engineer economic models and facilitate the creation of markets and products that were formerly nonexistent or unproductive. Most of these new market prospects are related first to its offer as an alternative to fiat currency, solving issues of currency inflation and political instability. Second, its power to achieve a digital identity in a fast and cost-effective way improves financial inclusion of previously underserved markets.
Blockchain technology also creates opportunities for startups and established businesses form non-financial sectors with a strong consumer base, like telecommunications or e-commerce establishments. Such players are rapidly innovating to create new business models and services, and are transforming the value chain landscape and challenging banks.
These initiatives have mostly originated from established markets, targeting developing countries directly or indirectly. Though they are not entirely based in developing countries, the best-funded ones are from developed markets for now.
A considerable chunk of the total venture capital has been invested in the digital wallet and capital market service segment. Regardless of their source, these startups are targeting the economic activities of emerging markets, such as remittances and trade finance.
This is an exceptional phenomenon, implying that developing countries can be reasonable testing grounds for new ventures, where high demand for financial inclusion and relative inadequacy of infrastructure can speed up the use of new technologies — particularly blockchain. The prospect of outspreading banking services in such markets is high, with two billion adults lacking access to financial and credit services globally. Cross-border payments and remittances are a case in point: it has a market value of over $4 trillion with transaction charges that range from 5% to 30%.
Citizens of developing nations who have migrated to developed countries for work drive the international remittance system. Time and again, these individuals send money to their families and friends back home using financial intermediaries such as Western Union, PayPal, MoneyGram, Payoneer, etc. These intermediaries impose high transaction charges.
According to the World Bank’s latest Migration and Development Brief, remittances to developing countries hit a record high in 2018. The recorded remittance to emerging markets in 2018 was $529 billion, an increase of 9.6% from 2017. The brief also revealed that the global remittance fee for Sub-Saharan African countries was an average of $20 per $200, which was the highest in the world.
With the emergence of cryptocurrencies, the cost of remittances can be considerably lower. While Bitcoin remains the largest cryptocurrency by trading volume, it can be difficult and unpredictable to use for remittances. Stellar meanwhile offers faster transactions and low fees making it ideal for remittance systems.
Already, there are several platforms using blockchain in emerging markets in Africa and Southeast Asia that support cross-border and peer-to-peer payment solutions, like BitPesa.
BitPesa is a blockchain firm offering foreign exchange and business-to-business crypto-based payment services in Kenya and many parts of East and Central Africa. The startup has managed to leverage the existing financial models by partnering with the M-Pesa mobile money network, a subsidiary of Telecom Company Safaricom and provider of mobile payments and significant incumbent player (almost three-quarters of Kenya’s adult population have an M-Pesa wallet).
Low financial inclusion is a significant problem in developing countries. According to the World Bank, there are over two billion people globally without a bank account, and a big percentage of this number comes from developing countries. In nations like Pakistan, Chad, Somali, Burundi, Niger, Yemen, and Cameroon, less than 15% of the adult population has access to banking services. Even those with bank accounts lack access to premium banking services, so they qualify as unbanked. The lack of access to banking services prevents them from partaking in global commerce.
With crypto services like BitPesa in Kenya, BitSpark in Hong Kong, OkCoin in China, OkLink in India, Rebit, and Coin.ph in the Philippines, billions of the unbanked population have access to financial services through cryptocurrencies. These startups are providing crypto banking services via mobile phone applications. The telecommunication industry has been able to attain a higher market penetration compared to the banking industry.
These blockchain-based companies are capturing the existing widespread use of telecoms to deliver their services to unbanked and underbanked people. The eventual result is better financial inclusion.
Besides, there is also an added advantage of empowering small and medium-scale businesses. Local merchants can tap into global trade. Financial institutions in developing countries are reluctant to offer loans for small-scale enterprises even when appropriate collaterals are in place.
With blockchain, platforms like BitPesa and OkLink can provide crypto-backed loans to small and medium scale businesses. This will go a long way in getting them started in foreign trade, which is an integral part of national commerce.
Another feature of financial inclusion that many developing countries face is the lack of global payment systems. International commerce is mainly denominated in US dollars, and it calls for specialized payment and documentation systems. This is an obstacle for many merchants in these countries as they lack access to foreign exchange and the means to send and receive money in foreign currency.
BitPesa is championing the provision of solutions to these issues across Africa. In Indonesia, TenX has a digital wallet that enables users to receive Visa card payments.
Corruption is one of the significant issues facing developing countries. The absence of economic democratization and corrupt officials has created a framework that has left the mutual prosperity of these nations at the mercy of a few individuals. The middle-class has shrunk, and over 70% of the people survive below the poverty level.
In emerging markets, misappropriation of government funds by corrupt officials is a significant issue. Refusal to adhere to project contracting best practices leaves state projects to be run by groups that channel the allocated funds to their pockets. The use of digital currencies, particularly those embracing smart contracts, will enable a more transparent contract system. With blockchain records being accessible to everybody, citizens will be able to track the way their funds are being used.
Blockchain in emerging markets will lead to lower remittance costs, better financial inclusion, and put an end to corruption loopholes. Driven by high demand, especially in catering for the needs of financially excluded markets, and a hedging plan through cryptocurrencies in situations of currency inflation and political instability, blockchain technology appears ripe for adoption. It will undoubtedly be interesting to see to what extent emerging markets apply blockchain solutions to the problems facing them.
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