What is "efficient" collaboration for social systems?

1. Background

Have you ever wanted to use the balance of one payment service for another? For example, have you ever wanted to use the balance of your transportation tap-to-pay card (IC card) for QR code payment? Transportation IC cards and QR code payments belong to different ecosystems. While transportation IC cards are used across transit systems and brick-and-mortar stores, QR code payments are used across both physical and online stores. While linking these different payment ecosystems offers great convenience for users, achieving it requires overcoming significant technical hurdles. Of course, whether interoperability brings business benefits is also an important point to consider and requires in-depth discussion, but in this article, we will look at it from a technical perspective.
The transaction tap-to-pay card (IC card) balances and QR code balances are currently managed by two entirely separate operators and run on different systems. If you were the administrator of the QR code payment system, how would you check that there was actually a balance on your transportation IC card? You might think that you could access the transportation IC card system and check the balance as a matter of course. In fact, such operation may be possible.

However, what if you were dealing with payment services in another country? Are the balances displayed in that foreign system correct and up-to-date? Are the funds safeguarded and ready to be withdrawn? Were the account balances acquired through fraudulent means? You may have questions like these.
To truly collaborate safely, it is necessary to ensure that the other party's system is trustworthy. To solve these problems, we are conducting research and development of inter-ecosystem collaboration technology.

2. Overview of Research and Development

Our R&D aims to enable collaboration between different ecosystems while leveraging their governance. Specifically, we are developing the following technologies:

1. Cross-verification algorithm for system operation status
2. Transaction concealment technology

The cross-verification algorithm for system operation status is a technology that records the state of each ecosystem at a certain point in time in a lightweight, efficient, and distributed manner. By recording the state of the ecosystem, you can check and verify that state later. This mechanism is vital for establishing system reliability when dealing with untrusted parties.
Transaction concealment technology is a technology that hides transactions between services. For example, when transferring the balance from a transportation IC card to a QR code payment, this technology can enable users to safely transfer the money without revealing the details of the transaction to its relay or recipient. The transaction content is kept secret according to the actual use case.

When considering collaboration among ecosystems, one approach would be to have all services, that want to collaborate with each other, participate and interact within the same platform. While this idea seems technically simple and idealistic, it can be difficult.
Each ecosystem is run by a different company with different governance and rules, and it can be difficult to operate on a platform that requires unified governance. Of course, when multiple ecosystems work together, a minimum set of rules needs to be established, but it is important to achieve a balanced interoperability while leveraging the governance of each ecosystem.

In the blockchain world, transactions with strangers are recorded in a tamper-proof manner, allowing them to be conducted between untrusted parties. However, in actual business world, trust is established through mutual trusted relationships and contractual agreements that do not necessarily rely 100% on technological guarantees. From a business perspective, it would be extremely rare to do business with someone to be completely untrustworthy.
This R&D is a distributed ledger technology in a broad sense, but it is different from pure blockchain technology. We aim to balance this with consideration for social acceptance. Striking a balance between ensuring the necessary and sufficient trust in society through the power of technology is the real pleasure of this research and development.

Furthermore, confidentiality technologies must comply with regulations such as AML (Anti-Money Laundering). For example, if the details of the remittances are entirely obscured, it may become impossible to verify whether the accounts involved are used for illicit activities. Therefore, the information that is required to be disclosed must be shared only with authorized parties while it remained shielded from unauthorized ones. Discussions with regulatory authorities may be necessary in these new business areas. It is also important to consider the extent to which individual rights can be protected with the power of technology, while social systems can be maintained with the power of regulation.

3. Business Development

Our R&D markets are not limited to payment services. We believe that inter-ecosystem cooperation technology has potential in various fields. For example, it is expected to be applied in traceability technology, supply chain, carbon credit management, and digital ID management.
Although it is a technology that can be widely deployed, actual businesses sometimes require technologies specialized for specific use cases.
We first developed technologies for payment services and then considered their deployment in other fields. Because the payment services market offers significant scale and is extremely important in social system, we are currently exploring this business area first. In addition, this R&D is primarily targeting fields where there is a loose social trust relationship. "Loose social trust relationship" means it is not that there is no trust at all but you can't trust the other completely, for example, international payment transactions and supply chain management between large corporate groups. Together with business owners, we will explore new businesses that can create business value by enabling collaborative relationships that would otherwise have been difficult to achieve with conventional mechanisms alone.

4. Future Outlook

We began full-scale research and development in fiscal 2024. In fiscal 2024, we developed the first prototype and confirmed the feasibility of the technology. In fiscal 2025, we aim to refine the prototype, implement it according to actual use cases, and conduct demonstration experiments involving actual external stakeholders. From fiscal 2026 onwards, we plan to advance development toward commercialization based on the results of the demonstration experiments.

While our R&D journey has just begun and the technology requires further maturation. Our strategy focuses on exploring entirely new business territories rather than merely replacing existing ones. It is necessary to develop both new technologies and new business areas by combining them. Therefore, we have set a goal for fiscal 2025 to conduct demonstration experiments assuming actual use cases. In this context, we need to strike a balance between how far we can use technology to protect individual privacy and how far we can guarantee relationships of trust. Although this is a grand theme, we will aim to create technologies we aim to create technology that is in harmony with society through demonstration experiments and future developments from this fiscal year onward.

Initial prototype image