Blockchain platform for factoring operations

2018: Expansion of the membership of the blockchain consortium

On July 11, 2018, M.Video announced the expansion of the commercial blockchain consortium. M.Video, Sberbank Factoring and Alfa-Bank were joined by ICD-Bank, Bank Soyuz, Otkritie and Eldorado.

The consortium members use an open blockchain platform based on Ethereum to conduct factoring operations with M.Video and Eldorado suppliers. Blockchain technology allows you to reduce costs both on the side of banks and retailers, increase the speed of confirming documents and making payments and strengthen the security of factoring operations. The supplier's data on the shipment of goods is loaded into the system by a bank or factor, encrypted and automatically compared with the retailer's data on the receipt of this goods. The matching of the "data chain" for a particular transaction transaction is the basis for the confirmation and financing of the delivery.

M.Video has been using smart contracts for factoring operations since the beginning of 2017. According to the company, more than 65% of factoring transactions are carried out on the blockchain. Over the past year, the number of transactions using this technology has grown 4.7 times, the volume of payments - 4.4 times.

Financial transactions for retail of such scale as M.Video and Eldorado should fully meet all requirements for safety speed and transparency both for customers and partners. Blockchain technology with minimal implementation costs allows you to completely eliminate the risks of loss of confidentiality and fraud, reduce operating costs, increase the speed and convenience of factoring payments. We see interest in such technical solutions not only in trade, but also in other industries, and together with partner banks we will continue to develop a blockchain consortium, "said Ekaterina Sokolova M. Video, financial director.

2017: Announcement

On October 13, 2017, it became known about the creation of a blockchain consortium by M.Video, Alfa Bank and Sberbank Factoring. They launched an open financial platform designed to save hundreds of millions of rubles by reducing the human factor.

According to the Kommersant newspaper, citing a representative of M.Video, the blockchain platform created by partners for factoring (financing suppliers for assignment of their receivables) transactions allows you to connect an unlimited number of suppliers and banks while preserving the confidentiality of transaction information. 

M.Video, Alfa Bank and Sberbank have created a blockchain platform for factoring operations

The new system is based on Ethereum smart contracts that reconcile delivery information. The platform, which is a public network of servers of each participant, is not intended for payments, but for fixing information about commodity and cash transactions between participants in the transaction. 

The use of blockchain automates the reconciliation of shipping documents and eliminates the risks of fraud and loss of confidentiality, reduces operating costs, increases the speed and convenience of factoring payments, "said Ekaterina Sokolova, financial director of M.Video.

According to her, so far tens of thousands of consignments used in factoring operations between the retailer and its suppliers have been processed manually - through e-mail, telephone communications and paper documents.

By October 2017, 20% of M.Video partners use blockchain for factoring. Annual savings on the use of blockchain in factoring may amount to about 150-200  million rubles a year, according to a newspaper source close to the project.

Sberbank told the publication that only professional participants in the factoring market and their customers will be able to connect to the platform of M.Video, Alfa-Bank and Sberbank Factoring. According to Kommersant, the project was also discussed with VTB and Promsvyazbank.^[1]

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