JPMorgan patents Bitcoin-like payments system

JPMorgan Chase has applied for a patent in the United States for its design of a payments system for online transactions that bears more than a passing resemblance to digital crypto-currency Bitcon.

The patent for a "method and system for processing Internet payments using the electronic funds transfer network" was filed with the United States Patent Office in early August this year, and published last month.

Like Bitcoin, JPMorgan Chase's system can create money and provide real-time notifications of payments for vendors.

'The present invention further enables small dollar financial transactions, allows for the creation of "web cash" as well as provides facilities for customer service and record-keeping,' the patent application states.

Micro-payments can also be enabled with the bank's system, another similarity to Bitcoin. The system would use a payment portal processor which "is a software application that augments any Internet browser with e-commerce capability."

Unlike Bitcoin however, JPMorgan Chase system would be a centralised with at least one directory of users and digital wallets containing funds.

The US bank sees its design as advantageous for those web merchants that today primarily accept payments through credit cards.

Unlike credit cards, the "new paradigm" for payments mooted in the patent eliminates disputes and charge-back processing, the bank says.

Under the proposed system, hackers cannot steal customers' credit card numbers from web merchants, as the merchants never receive this information. This in turn reduces the banks' exposure to fraud.

Merchants using the system would also save on transaction fees incurred through credit card payments processing, the patent noted.