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Facilitate faster and more secure mass payment processing with blockchain

Posted by L3COS Jul 27, 2020

Paying salaries, pensions and other forms of remunerations via traditional methods can lead to security issues with recipients’ data. Businesses have to update records manually and these pieces of information are vulnerable to breaches in a centralised database.

Regulated blockchains create a platform that can make payments faster, cheaper and more secure. As blockchain technology develops, it will play an increasing role in mass payments.

According to the World Economic Forum, 10% of worldwide GDP will be stored using blockchain by 2027. So, how does regulated blockchain make payment processing better?

Current problems with payment processing services

Payment processing has improved over the years with digital payment solutions.

However, these platforms still have significant inefficiencies.

  • Long processing time: Usually, businesses have to create payment requests days before their employees receive their salaries. Additionally, employers with pension plans have to create records for monthly contributions to be made. Payments have to be vetted manually, which wastes time before payments are confirmed. In some cases, if a business fails to lodge their payment request within a specific date range, employees could receive their salaries late.
  • High transaction fees: In the United States, 82% of employees receive their salaries through direct deposit. Though this is easier for businesses, they will incur charges depending on the financial institution, number of employees, and other factors. For most financial institutions, businesses have to pay $50–$149 for setup and $1.50–$1.90 for each transaction. They may also have to pay added charges when they enrol a new employee to the payment list.

deposit statistics

  • Risk of data breach: When businesses have their payment information and history on a centralised database, there’s a risk that their employee information will be compromised. This type of information is usually the most targeted in data breaches. According to Forgerock, personally identifiable information is the most targeted data for breaches, accounting for 97% of all breaches in 2018. An example of this is the Sage UK Payroll data breach that occurred in 2016. A Sage UK Payroll employee compromised bank account information and the personal details of employees of 300 large UK companies.


Regulated blockchains have the potential to eliminate these issues.

How regulated blockchain can enable faster, secure payment processing

Blockchain has many vital features such as decentralisation, which improves security, or the consensus mechanism, which authenticates transactions. However, traditional blockchain is insufficient for payment processing, as it has been used for money laundering and criminal activities in the past. Therefore, only a blockchain capable of being regulated will make it suitable for mass payments.

With a regulated blockchain, central banks and governments can ensure that organisations comply with anti–money laundering and criminal finance regulations.

On a regulated blockchain, financial regulatory agencies, banks, businesses and employees have access to the blockchain, with different levels of authority and permissions.

To ensure privacy, these parties can choose to use a private (permissioned), consortium, or hybrid blockchain. This means only specific people have access to the blockchain and parties can decide which information to reveal or hide.

The L3COS 3-level consensus mechanism allows parties to authenticate transactions based on their authority, which prevents invalid transactions. Also, the immutability of the blocks makes it impossible for any party to change the data that’s already in the blockchain.

By using public keys, employees and pensioners can receive payments without revealing unnecessary information to the paying party. Once regulatory agencies and businesses authenticate a particular blockchain user for payment, the individual can receive payments without the risk of revealing their bank details, salary history, social security or national insurance number, to unauthorised parties.

The peer-to-peer (P2P) nature of the blockchain allows employers to pay employees (or pension funds to pay retirees) without involving third parties. This results in eliminated or minimised fees.

For large organisations with thousands of employees, scalability can be an issue when deploying blockchain. Considering that a platform like Bitcoin can execute only 7 transactions per second and Ethereum can execute only 15, this can make this type of blockchain unsuitable for businesses that perform thousands of transactions at once.

transaction rate

L3COS, with its ability to execute over 50 000 transactions per second, gives organisations absolute scalability for their payment transactions.

Another vital part of making mass payments on a blockchain is the use of smart contracts. Put simply, smart contracts are computer programs created to automatically execute the terms of a contract.

When a party creates a smart contract, there are set conditions that the other parties must meet before the reward is activated. For mass payments, the employer will create smart contracts based on conditions that employees must meet to qualify for the salary.

This could be simple or complicated depending on the organisation and their modus operandi. For instance, smart contracts can automatically send an agreed-upon amount to an employee’s pension account or other pension plan.

Governments can also create smart contracts to release social security payments to qualified recipients. Using smart contracts makes transactions faster as there’s no need for time-consuming manual approval.

Regulated blockchain provides a robust platform that automates mass payments, increases speed, improves security, and enables government regulation.


With increasing digitalization, making payments has become easier.

However, there are still problems such as slow transactions, risk of data breach and charges that businesses would rather avoid.

With a regulated blockchain, businesses have a platform where they can automate and send payments in a fast and secure way; governments can oversee these transactions and ensure that regulation is adhered to.

L3COS, as the first quantum-safe blockchain-based operating system, provides a robust platform where businesses can build ideal mass payment processing systems.


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