Facilitate faster and more secure mass payment processing with blockchain

Posted by L3COS Jul 27, 2020

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

Fortunately, regulated blockchain is a platform that can make social payments faster, cheaper and more secure. As blockchain technology develops in the near future, it will start to play an increasing role in mass payments.

According to the World Economic Forum, 10% of worldwide GDP will be stored using blockchain by 2027. 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 inefficiencies that leave a lot to be desired. Here are a few of them:

  • Long processing time: Usually, businesses have to create payment requests days before their employees receive their salaries. Also, employers with pension plans have to create records for monthly contributions into pension funds. This is because payments have to be vetted manually, which can waste a lot of time before payments are confirmed. In some cases, if a business fails to lodge their payment request within the adequate date range, employees might receive their salaries late.
  • High transaction fees: In the United States, 82% of employees receive their salaries through direct deposit. Even 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 will have to pay $50–$149 for setup and $1.50–$1.90 for each transaction. Also, they may have to pay additional charges when they add 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. In fact, 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 personal details of employees of up to 300 large UK companies.


These are issues that can affect the efficiency of mass payments that are vital to business operations. Fortunately, regulated blockchain has the potential to eliminate these issues.

How regulated blockchain can enable faster and more 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 regulated blockchain will make blockchain 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.

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 financial information, such as bank details, salary history, social security 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.

To sum up, regulated blockchain provides a robust platform that automates mass payments, increases speed, improves security, and enables government regulation.


With increasing digitisation, making payments has become easier over the years. 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. Also, governments can oversee these transactions and ensure that government regulation is adhered to.

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



Your email address will not be published. Required fields are marked *