MonetaGo Debuts India’s First Blockchain Network To Nix Factoring Fraud
MonetaGo is rolling out India’s first blockchain network, a solution aimed at addressing the risk of fraud in the trade finance market.
A press release on Tuesday (April 3) said MonetaGo is collaborating with three India-based factoring platforms — RXIL, A.TReDS and M1xhange — to launch the blockchain network, which connects various financial service organizations that provide invoice financing.
According to MonetaGo Chief Executive Jesse Chenard, between 1 and 2 percent of invoice financing around the globe is subject to fraud. This often occurs when suppliers send duplicates of the same bill to multiple funding avenues, reports in American Banker noted.
“Because today they don’t have a way to communicate with each other, that’s one way [fraud] is perpetuated,” Chenard told the publication.
MonetaGo’s blockchain platform was developed using Hyperledger Fabric to facilitate connectivity between partners to prevent invoice fraud. The tool can automatically identify a duplicate invoice, even if the bill has been slightly altered to appear different. Reports explained the solution is designed to prevent a supplier from accessing financing from multiple sources on the same invoice.
According to MonetaGo Chief Technology Officer Brendan Taylor, the technology is also designed to prevent false positives.
“There are cases where a small change in invoice is completely legitimate, so we can}t just block everything from that perspective,” he told American Banker, adding that it is up to the customer to ultimately “do more digging” on the invoice in question.
MonetaGo and its partners aren’t the first to explore the use of blockchain for factoring.
Last month, Singapore-based Acudeen revealed plans for an initial coin offering as it plans to migrate its existing factoring platform to blockchain infrastructure. The company’s initiative focuses on efficiency and reduction of paper documents.
“The use of letters of credit is becoming less and less,” said Acudeen Co-Founder and CEO Magellan Fetalino in an interview with reporters at the time. “It’s becoming harder even for medium-sized businesses to use letters of credit to get access to financing due to issues both in the market and regulatory environment.”
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