JPMorgan Chase has filed a US patent application for
a computerised payment system that resembles some aspects of Bitcoin, the controversial virtual currency.
Like Bitcoin,
JPMorgan's proposed system would allow people to make anonymous, electronic payments over the internet, without having to reveal their name or account numbers or pay a fee, according to the patent application.
The application put a spotlight on the behind-the-scenes battle being waged between the biggest banks, credit card operators and companies such as Google, Apple and PayPal – are all keen to grab a slice of the rapidly expanding business of providing mobile and internet payments as more people shift to online buying.
At the same time, traditional finance companies have had to contend with new types of virtual currencies, which some people view as viable alternative payment systems that could one day challenge the biggest banks and credit cards.
JPMorgan said in its patent application – which dates back to 1999 but was recently updated – that the new payment system would compete with debit and credit cards as the predominant way of making online transactions.
But some see the bank's proposed payments technology as borrowing features from Bitcoin, to date the most prominent of the new crop of virtual currencies.
The price of Bitcoin has soared to more than $1,240 this year as investors have piled in to the fast-appreciating crypto-currency.
JPMorgan's proposed system involves creating "virtual cash" that would sit in an online wallet, reminiscent of the computer files that hold Bitcoins on behalf of their users.
The JPMorgan system would also create a public record of transactions made using the technology – a feature that would appear to mirror Bitcoin's use of "blockchain", a massive block of code stored across a peer-to-peer network of computers that acts as a public ledger of all Bitcoin transactions.
In depth
Increased trading in the decentralised virtual currency has begun to attract the attention of regulators.
While the bank does not name Bitcoin or any other virtual currencies in its patent application, it does hint at "emerging efforts" to challenge the dominance of credit card technology.
"While new internet payment mechanisms have been rapidly emerging, consumers and merchants have been happily conducting a growing volume of commerce using basic credit card functionality," JPMorgan said in the application.
"None of the emerging efforts to date have gotten more than a toehold in the market place and momentum continues to build in favour of credit cards."
Critics of Bitcoin added that JPMorgan's move also highlighted the vulnerability of the new virtual currency to imitations. Already, new types of virtual currencies have emerged that attempt to improve on Bitcoin's perceived weaknesses.
A person familiar with the original JPMorgan patent said that it had "discussed ideas about different way that payments could evolve in the future." The notion of providing anonymous payments was first inserted in 2003 and continued to be considered internally.
