DWP looks to blockchain and DLT to boost payment system

13 Aug 2019

The UK’s Department for Work and Pensions has announced blockchain – the tech underlying Bitcoin, the world’s largest cryptocurrency by market cap - could disrupt the payments industry.

According to Richard Laycock, the deputy director of digital payments and banking systems at the Department for Work and Pensions (DWP), the agency is seeking to transform its payments infrastructure.

The DWP is attempting to make its payment system “efficient, modern, fast, scalable, flexible, innovative and available 24/7” and is therefore contemplating blockchain and distributed ledger technology (DLT) as potential disruptors to the payments system.

Mr Laycock said in a blog post: “Before shaping the future, we need to consider the influencers and disruptors that could have direct and indirect implications. Some of the disruptors we’re watching are Blockchain and Distributed Ledger Technologies. Other important influencers include socio-economic changes, such as an aging population increasing demand on our services.”

As well as other options that could ostensibly benefit the DWP’s payment system, Laycock added that open banking could enable new business models and products: “We’re also looking at the introduction of open banking, which is aiming to create more competition in the payments industry by opening up and standardising banking data.”

Earlier this month, reports Coin Telegraph, the U.S. Federal Reserve Board unveiled plans to launch a real-time payments and settlements service to enhance the country’s payments infrastructure.

It has been reported that the agency is planning to develop a new interbank real-time settlement service called FedNow to adopt faster payments in the U.S., due to be launched in 2023 or 2024.

Back in June, SWIFT released plans to permit companies operating DLT systems to use its global payments innovation platform. Additionally, Visa announced a new centralised payment network for business transactions incorporating certain aspects of decentralised technology.