MUFG shuts down blockchain-based payments network

MUFG, Japan’s biggest bank, has announced it will shut GO-NET, the IoT payments solution it set up in 2019 as a joint venture with Akamai in which MUFG held an 80% stake.

GO-NET targeted high-volume, low-value digital payments such as vending machines or micro-transactions involving IoT devices.

Slow growth in the number of transactions resulting from the COVID-19 pandemic made it difficult to expand the business at the pace originally planned, MUFG said.

Furthermore, the network struggled to find a fit in the internet-of-things (IoT) market, which it planned to incorporate.

“As a result, the business is not expected to be able to achieve profitability in a reasonable time frame,” a MUFG statement said.

MUFG Progmat

In the meantime, MUFG will continue to accelerate digital transformation as its core strategy in order to become a “leading business partner that pioneers the future with financial and digital capabilities.”

The company also said that it continues discussing further opportunities of collaboration with Akamai to utilise the “latest technologies based on experience from the GO-NET project.”

In an entirely different venture, MUFG Trust’s Progmat blockchain platform will support digital payments through stablecoins issued by multiple banks.

Progmat Coin is more likely to involve higher value payments given an initial focus on securities transactions. It also has an ecosystem with 84 other business participants.

This system involves multiple issuers responsible for pools of money, with each looked after by a trustee. MUFG will be one of the issuers, but it intends there to be several others. Each pool of money is isolated in a trust, so if the issuer or an intermediary goes bankrupt, the funds should still be safe. As a result, all the funds are considered interchangeable. In some ways, it’s more similar to e-money.

Similar to public blockchain stablecoins, there is no interaction with the banking system when a payment is made. The token just passes from one user to another, and the blockchain acts as the ledger of record. If a coin holder wants to redeem some funds, then one of the issuers will pay them fiat and reduce the funds in that trust.