As public enthusiasm continues to grow over bitcoin, the digital crypto-currency, JPMorgan Chase seeks to patent an online payment system that would allow digital wallets, as well as anonymity – the most attractive feature to internet users.
In an apparent effort to compete with bitcoin, the decentralized
online currency that has taken the internet by storm, JPMorgan
Chase, the largest American bank by assets, has patented its own
online payment system.
According to a patent application filed August 5 with the US
Patent and Trademark Office (UPTO), JPMorgan’s patent would give
online users the ability to shop without the hassle of filling in
a payment form with each purchase.
With what has been dubbed its ‘Internet Pay Anyone Account,’
users will be able to spend "web cash" that has a
"real-time digital exchange of value".
Admitting that traditional credit cards will continue to dominate
the internet “for at least the next five years,”
JPMorgan said the consumer cost of using credit cards for many
low-cost purchases is becoming too expensive for many consumers.
At the same time, use of the bitcoin has helped online merchants
trim costs and attract new customers.
Since January, the value of a single bitcoin, introduced in 2009,
has skyrocketed
from $13 to more than $1,000.
JPMorgan acknowledged the disadvantages of using traditional
credit cards inside of a market that demands speed, security and,
most importantly, low cost.
“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,” the US banking
giant admitted in its patent application. “For lower-cost
items, the relatively high transaction processing fees plus the
discount result in the transaction processing fee consuming a
relatively high proportion of the total revenue generated by the
product sale.”
In an apparent nod to bitcoin, JPMorgan said the popularity of
online shopping “is spawning a direct model in which
manufacturers of products or services are able to deal directly
with consumers.”
The patent application emphasized the rise of “intense price
competition” among online manufacturers, who are facing
“much tighter margins” to make a profit. The competition
has forced merchants to find new ways of reducing payment
processing costs for their customers.
JPMorgan pointed to intellectual products, such as
“publications, music, video, software, games” that are
more easily purchased over the Internet as opposed to
“traditional physical (paper or disc) media.”
Higher bandwidth, together with the introduction of new
technology to upload the intellectual products, points to robust
growth in this segment of the online market. The changing
dynamics of online shopping demands a “payment form that has
a low cost.”
"A new marketplace has emerged for low dollar, high volume,
real-time payments with payment surety for both consumers and
producers," the financial holding company writes in the
application.
The system also allows for anonymity.
"The credit pushes can be made completely anonymously, with
the recipient of the credit having no way to determine from where
the credit originated," the according to the bank’s
application.
Another feature of JPMorgan’s patented digital wallet is the
security it provides to online shoppers, who will be able to
store virtual money into accounts, which, like bitcoin, is
secured through cryptography, thus guaranteeing no breaches of
security in the transaction between consumer and manufacturer.
However, it was anonymity that led the FBI in October to shut
down Silk Road, a website that specialized in illegal drugs. An
FBI official told Forbes the agency confiscated 144,000 bitcoins,
worth close to $28.5 million at current exchange rates.
The official declined to reveal how the bitcoin wallet was traced
back to the owners of Silk Road.