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OCBC has revealed a blockchain-based conditional payments solution for Singapore’s Land Transport Authority (LTA).
As part of the bank's involvement in the Monetary Authority of Singapore’s (MAS) Project Orchid, the initiative aims to improve transparency and streamline mobilization advance payments to contractors.
Through blockchain technology, OCBC enables LTA to automate critical upfront payments, which aid contractors in managing substantial initial costs. Mobilization payments represent a percentage of a project's total value.
In the new system, these payments are automatically released to contractors when predefined conditions, verified by smart contracts, are met.
LTA can monitor the process through the blockchain, ensuring that funds are properly managed across projects.
The pilot of OCBC's blockchain solution is being used by three primary contractors for Singapore's Cross Island Line, with $22 million being disbursed. This demonstrates the process's effectiveness in managing high-value, complex transactions in real-time.
Melvyn Low, head of global transaction banking at OCBC, said, “We are excited to embark with LTA on this journey of transforming the way payments are handled in the construction industry."
"This blockchain-based conditional payment solution will improve the governance and transparency of utilisation of the mobilisation advance payments that LTA extends to its contractors.”
MAS describes Project Orchid as "a multi-year, multi-phase exploratory project examining the various design and technical aspects pertinent to digital Singapore dollar, from its functionalities to its interaction with existing payment infrastructures."
