Barclays and Israel-based startup Wave, which has benefitted from the former’s accelerator program, have revealed what they claim as the first global trade transaction using blockchain technology.
In an announcement today, Barclays has revealed a successful letter of credit transaction between Ornua, an Irish agriculture co-operative and Seychelles Trading Company a distributor of food products in the region.
The transaction saw the export of cheese and butter worth nearly $100,000 from Ornua to the Seychelles Trading Company, a Reuters report revealed.
The documentation was successfully handled on a blockchain platform developed by Wave, an Israel-based startup that came through Barclays’ accelerator program. Meanwhile, the funds for the transaction were transferred via Swift.
A press release communicated to CCN reveals Barclays’ stating that the companies who frequently deal with the shipping industry are expected to be among the biggest beneficiaries.
A typical trade finance transaction, end-to-end, takes anywhere from 7 to 10 days and the blockchain-led process is expected to cut that down to a mere few hours. Barclays also claims that companies will see “substantial direct cost savings” by negating the need for couriers alone.
In statements, global head of trading and working capital at Barclays, Baihas Baghdadi stated:
One of the biggest headaches in global trade currently is the vast movement of paper required to facilitate transactions, with multiple organisations in the chain.
That is why we’ve been very keen to partner with Wave in using blockchain technology to save time and money for our clients, and potentially transform trade finance for businesses around the world.
As the first user of blockchain technology for trade finance of commodities, Ornua group trade finance manager David Rourke said:
Moving to paperless trade would be hugely beneficial in supporting the supply chain, through reduced costs, error free documentation, and fast transfer of original documents to our customers worldwide.
2016 has seen previously seen transfer of value via a private blockchain platform. In early January, 11 global banks across four continents participated in an experiment involving an R3-developed distributed ledger. The test ran for five days, continuously for 24 hours a day with participating banks simulating the exchange of trade and value.
In August 2016, R3 revealed that 15 of its member banks had participated in a trial involving trade finance.
Images from Shutterstock.