International Air Transport Association (IATA) accepts money in one currency and pays out in another. Originally, IATA used the mechanism of the banks, which have assumed the risk of holding foreign currency reserves. This is a traditional solution to the problem. However, it involves excessive settlement time and the expenditure of additional funds for covering currency conversion fees. By this model, simply providing clearinghouse services cost our client millions on transaction fees when moving funds across borders. Settlement cycles were complicated, requiring multiple departments to maintain and coordinate settlement processes and meet an endless series of deadlines.
Lykke designed a platform based on the Blockchain using IATA Settlement Coin, which massively increased the speed of international payments for services provided by association members. The technology reduced the cost of transferring money and empowered our client’s membership to make payments directly among themselves before the end of the cycle. As a direct result, during the pilot phase it was possible to achieve netting in advance of up to 80 percent.
In addition, the solution provides heightened protection from fraudulent transactions and offers the capability to automate currency movements associated with routine operational procedures.