With the potential for central bank digital currencies to have additional functionality, like programmable payments, this use case explores how a person might purchase goods from a retailer counting on the added safety of smart locks.
Smart third-party locks are an example of programmable payments that condition digital currency spending until specific parameters are met.
These locks enable the user’s payment interface provider, another PIP, or a trusted third party to determine when the funds can be unlocked and either returned to the user or paid out to a designated recipient. Smart locks have a time limit, and once the expiry date has passed, the locked funds become available for the user to spend again.
The programmable function allows all parties to agree to the payment terms at the point of purchase, giving greater control to the customer whilst still assuring the retailer of payment.
Some of the typical steps in which the customer would be involved.
- All parties agree to the terms of the transaction at checkout
- Funds are then locked whilst still held in the customer’s bank account, with instructions for the retailer to be paid upon successful delivery of the goods
- Once the delivery (or other commitment) is confirmed via an API call, the locks are then released, and the funds are sent directly and instantly to the retailer
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