The use of highly targeted and controlled smart payments across Australia's health and welfare sector has inched a step closer.
Data61 and the Commonwealth Bank claim to have successfully trialled an app that could make blockchain-based programmable money a reality for the National Disability Insurance Scheme (NDIS) payments.
The pair partnered last month to bring the prototype app to NDIS participants and service providers as a test case for the potential use of ‘smart money’ using blockchain technology.
‘Smart money’ allows for conditions to be attached to payments, making the NDIS' use of highly personalised participant payment plans ripe for the first case study of the proof of concept.
The prototype app was expected to allow participants to find, book and pay for services from NDIS service providers without needing paperwork or using receipts, a major headache under the current system.
The results
Data61 and CBA have now revealed the results of the trial after testing the app with ten NDIS participants and carers, as well as a small number of disability service providers.
They said participants and carers estimated that the prototype app “could save them one hour to 15 hours per week”, averaging at three hours.
Service providers, on the other hand, “estimated potential annual cost savings as a percentage of revenue of 0.3 percent to 0.8 percent”.
Modelling by CBA also put the economic benefits of the app – even using conservative estimates – as equal to “hundreds of millions of dollars annually” if the proof of concept was rolled out as a full-scale solution.
“Overall, our results indicate that there is strong potential to better enable conditional payments in Australia,” Data61 and CBA said in they're assessment report on the trial.
They said the trial could pave the way for the wider application of the technology across the government, business and not-for-profit sectors, particularly for managing insurance payouts, budgeting and the management of trusts and charities.
But they also conceded that further work would be required to deliver "refined solutions".
"Before any implementation of the smart money proof of concept is commenced for any
conditional payment environment, a business case and/or cost benefit analysis would need to beundertaken," they said.
"Careful consideration would also need to be given to the proposed governance arrangements for the system, including which parties should be processing nodes, who has visibility of the blockchain and who is eligible to set and modify conditions."
The optimism of the CBA and Data61 trial contrasts sharply with the view of blockchain technology by the government’s IT lead, the Digital Transformation Agency, which recently cast doubt on its use for government applications.
The agency has been looking at the potential applications of blockchain for welfare payments since being direct to do so by former Prime Minister Malcolm Turnbull.
How the proof of concept works
The prototype app was built by Data61 and CBA using an agile approach that involved "multiple rounds of user testing and interation involving participants, carers and service providers".
Using a blockchain system operating on a permissioned Ethereum network, it allows for budgets in NDIS plans to be translated into blockchain tokens that represent "promises to pay in Australian Dollars".
Participants, who only see their budget balances and not the tokens, are then able to use these tokens to book or purchase services through the app.
The tokens would in turn be received by a provider for delivering eligible services and subsequently transferred to the NDIA for payments through the New Payments Platform - though integration with the NPP was not tested as part of the proof of concept.
Three processing hubs in the blockchain system also allow with processing hubs for the National Disability and Insurance Agency (NDIA), the financial institution enabling payments and an observing regulator.
