Commerzbank, one of Germany’s largest banks, revealed yesterday that they successfully tested a blockchain-based machine-to-machine (M2M) payment solution.
According to the press release, Commerzbank is the first German bank to develop such a solution. The goal is to automate payments between trucks and charging stations, removing human interaction.
How does it work?
The pilot, which proved successful, entailed a fully automated payment process between an electric charging point and a Daimler truck system.
The press release reads:
“For this transaction, Commerzbank issued Euros on a blockchain and provided Daimler Trucks with “cash on ledger” (i.e. the money on the blockchain) to process the payment.”
The bank explained that this pilot represents the current rise of digitalization that we’ve been seeing. As machines are increasingly interconnected with each other, the degrees of autonomy is also increasing. Independent communication and interaction between machines (M2M) will soon enable the settlement of payments in automated contexts without the need for human intervention to trigger transactions.
While the pilot demonstrated that the charging and the payment processes can be performed automatically, with no human interaction, the current payment systems don’t meet these requirements yet. However, Commerzbank is determined to continue exploring new digital payments solutions.
Stephen Müller, Divisional Board Member Transaction Banking at Commerzbank, explained:
“After having completely digitised securities transactions in past pilot projects, the focus is now shifting to DLT-based payment structures. As a bank, we see our mandate as creating new digital payment architectures for our clients.”
The solution tested in the trial can be exported to other industries, leading to efficiency gains in logistics as vehicle automation continues to grow. Other use cases in machine-to-machine communication, such as in the real estate industry, can directly benefit leverage this solution.
Commerzbank hasn’t confirmed which blockchain infrastructure was used for this M2M pilot. If we see a take-off in blockchain-based M2M payments, Commerzbank will have been the pioneers.
Germany works to become a blockchain hub
The country has been actively investing in the technology. Last month, Fundament, a Berlin-based blockchain startup, obtained approval from Germany’s financial regulator (BaFin) to issue the first tokenized real-estate backed bond. The offering was of 250 million euros and was tokenized on Ethereum.
This spring, BaFin approved a crypto lending platform, Bitbond, to release their security tokens (Bitbond Token – BB1) to international investors. Built on the Stellar blockchain, this was the first security token launched in the country.
As European countries work to regulate cryptos and invest in blockchain, Liechstenstein, Switzerland and France are leading the race. Therefore, it’s no wonder that Germany is working to become one of the front-runners. Commerzbank’s project shows how traditional institutions are working to apply new technologies. Blockchain has proven to have many applications in the finance and banking industry, causing disruptions in many sectors. It’s always interesting to follow how banks are integrating the tech.