Dropp, the Hedera Hashgraph-powered merchant payments solution, has been added to the U.S. Federal Reserve’s FedNow website as a showcased service provider. According to the listing:
“Dropp has leveraged distributed ledger technology and regulated banking technology to build an extremely secure and cost-effective solution where merchants can accept payments as low as a cent. Dropp is a Pay-By-Bank alternative to credit card payments, allowing merchants to accept small-value purchases digitally without paying large transaction fees.”
This opens up the potential for micro-transactions and the provision of goods and services at a granular level not previously possible due to credit and debit card processing fees. For example, rather than paying a monthly subscription for a service such as Spotify, low-fee micro-payments could enable customers to pay only for actual usage.
Consumers do not need to share any personal data with merchants and retain full control over payments. These are made via Dropp’s digital wallet for mobile phones and web browsers, either by one-click purchase or scanning a QR code.
The platform also offers an embedded payment solution to financial institutions, enabling banks to provide personal and merchant customers with a branded Pay-By-Bank shopping alternative to card-based systems.
Dropp currently uses the U.S. automated clearing house (ACH) to fund the consumer wallet and make end-of-day payments to merchants. However, it has plans to connect with banks using FedNow to provide end-of-day real-time settlement and instant payment services at the retail level.
Although Federal Reserve Financial Services (FRFS) makes it clear that inclusion in the service provider showcase is by no means a recommendation or endorsement, it does at least indicate an acceptance of blockchain and distributed ledger technology (DLT), which is often severely lacking from U.S. institutions.
Dropp is built on the Hedera Hashgraph blockchain, which offers over 10,000 transactions per second and transaction fees of under $0.01 to transfer HBAR, stablecoins or any other cryptocurrency minted on the platform. The platform’s Hedera (HBAR) token jumped 16% on the news of Dropp’s inclusion in FedNow.
FedNow is a real-time instant payments platform developed by the U.S. Federal Reserve. It was launched in July, bringing the country’s payment system bang up to date, in line with those of other major economies around the world.