Using blockchain and micropayments to pay fines is an innovative concept that can bring significant benefits to the traditional fine payment process. Blockchain, as a distributed and immutable ledger, ensures transparency and security. Each fine payment transaction could be recorded on the blockchain, creating an easily verifiable and tamper-proof record of the payment.
Micropayments, which are made possible by blockchain technology, could significantly reduce transaction costs associated with traditional payment methods. This is particularly relevant for small fines where the administrative cost of processing the payment could be disproportionate.
Blockchain transactions can occur in near real-time, allowing for instant settlement of fines. This eliminates delays associated with traditional payment methods like checks or bank transfers.
How micropayments benefit citizens
Micropayments also make it easier for individuals to pay fines, as they can make small payments over time rather than paying a lump sum upfront. This can ease the financial burden on individuals who might struggle to pay a large fine all at once.
Smart contracts, which are self-executing contracts with the terms of the agreement directly written into code, could be used to automate fine payment processes. For instance, a smart contract could automatically deduct small amounts from an individual’s account until the fine is fully paid. Blockchain can also facilitate cross-border payments, making it easier for individuals to pay fines even if they are in a different country than where the fine was issued.
The problem with legacy systems where micropayments can help
One of the best use cases for these technologies is in large cities such as New York which have eight or nine different transport authorities, says Bryan Daugherty (Public Policy Director at the BSV Association).
‘Each one of those transportation modes has a different payment system which requires multiple contracts. This makes it very difficult as a citizen as you might need to have five different payment apps which have your data and credit card information.
‘This means you are effectively at risk of leaking data every day – it is in all of these ‘honeypots’ – and someone presses the wrong button because they are thinking the wrong button because they think they are getting a free membership and 15 million people have their data leaked.’
Daugherty said that the same principles apply to paying fines and penalties and that truly ‘smart cities’ should try and unwind themselves from these legacy systems if they truly want to move forward.
Fines made smarter by micropayments
Beyond micropayment capabilities, there are other clear benefits that blockchain technology can bring to the fine-paying process. When a fine is issued, the relevant information, such as the amount, reason for the fine, and the individual or entity responsible, would be recorded on the blockchain. This information would be cryptographically secured and timestamped, ensuring its accuracy and preventing tampering.
However, there are also other interesting ways authorities can use blockchain technology and micropayments. Notably smart contracts, which are self-executing contracts with predefined rules and conditions, could be utilised to automate the fines payment process. For example, if the fine is not paid within a certain timeframe, the smart contract could automatically impose additional penalties or restrictions.
Law enforcement agencies, courts, and other relevant parties could also have access to the blockchain to verify the payment and update their records accordingly. This could potentially reduce administrative overhead and errors.