Commerzbank, the second-largest bank in Germany, is reportedly exploring a blockchain-based machine to machine payments solution using Daimler trucks, according to an announcement on August 8.
The pilot project has already completed its first testing, where it involved the exchange and settlement of payments between an electronic charging point and a Daimler Truck system without any human intervention. For the transaction, Commerzbank issued Euros on a blockchain and provided Daimler Trucks with ‘cash on ledger’ to process the payment.
Commerzbank’s payments processing uses the Corda blockchain, which is the same technology that has been used by the bank for many of its blockchain initiatives.
Following the testing, it has been determined that both charging and subsequent payments can be processed fully automatically. According to the bank “independent communication and interaction between machines is happening, this also enables the settlement of mutual payments.”
Meanwhile, the system is aimed at a new generation of interconnected machinery capable of operating with surging degrees of autonomy. Stephan Müller – divisional board member transaction banking Commerzbank – explained that the this new system can lead to significant efficiency gains in logistics chains, which could further amplify as vehicle automation increases.
“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.”
He adds that further development steps for blockchain-based payment processing in other sectors such as the chemicals, manufacturing and real estate sectors, are being currently explored.
The new system has been granted regulatory approval from the German Federal Financial Supervisory Authority (BaFin).
On the other hand, Dr Helge Königs, head of the Truck Wallet project at Daimler Trucks, has elaborated on several applications for this new payment system, including how it can prevent fraud. He stated that “this renders it practically impossible to carry out such things as fuel card scams whereby criminals copy a fuel card and spy on the PIN number being entered.”
He further added that in the future using automated payments will enable drivers to focus on other tasks, and will ultimately reduce the need for reconciliation because all the transactions will be on a distributed ledger.
The giant automobile company has noted that the Daimler Truck ID and Truck Wallet are still in the prototype phase. Other potential applications include processing tolls, transmitting freight papers, potentially controlling and billing subcontractor drivers, and processing pay-per-use vehicle leasing.
This is not the first time that both Commerzbank and Daimler have ventured into the blockchain technology.
Earlier this year, the bank executed commercial transactions through trade finance blockchain Marco Polo, as well as processed a commercial paper transaction in minutes rather than days, thanks to the technology.
In addition to that, it had executed two money market tests, one with Deutsche Börse and another with Siemens and Continental. The bank is currently working with the German innovation group Fraunhofer IML to explore the future of exports and trade finance.
Prior to this news, it had been reported in July that Daimer partnered with European blockchain interface solutions startup Riddle & Code to provide an open car hardware wallet solution.