Akamai, MUFG Tie-up To Bring Blockchain-Based Payment System

Akamai Technologies (NASDAQ:AKAM) joined forces with Mitsubishi UFJ Financial Group Inc. (NYSE:MUFG) to deliver a new hyper-scale online payment network in Japan by first half of 2020. The payment network will be designed and deployed on Akamai Intelligent Platform and leverage blockchain architecture.

Primarily aimed at “processing more than one million transactions per second at latencies of less than two seconds per transaction”, the platform is envisioned to be “extensible to 10 million transactions per second.” This hyper-scale transaction process will ensure material cost efficiencies.

Akamai and MUFG prioritize scalability, latency and security aspect of the new network. The comprehensive set of solutions is likely to enhance current payment processing, micropayments, pay-per-use, and other IoT-based payment transactions.

Per McKinsey report, global payments industry generated 34% of total banking revenues in 2016, surging 27% in five-year time span. Per McKinsey’s Global Payments Map data, industry growth is likely to average 7% by 2020 to reach $2 trillion.

Offering this network for use to the Japan’s payment network will boost Akamai’s top-line.

Expanding Foothold in Blockchain Bodes Well

Blockchain is a technology that allows cryptocurrencies to exist as it tracks transactions relating to digital assets. However, it can also track documents which make it especially attractive to those in the banking, finance and insurance industries. Hence, the new network will aid Akamai in expanding its presence in this space.

Blockchain technology is projected to reach $2.3 billion by 2021 from $210.2 million in 2016 at a CAGR of 61.5%, per data from MarketsandMarkets. We believe, Akamai’s new blockchain-based development is well poised to be a long-term driver.

Per Statista, total transaction value in the "digital payments" segment came in at $160,731 million in 2018 in Japan. The country is projected to report total transaction value of $209,558 million in 2022, representing a CAGR of 6.9%. Offering the network for use to Japan’s MUFG payment network will bolster Akamai’s top-line, going forward.

Zacks Rank & Other Stocks to Consider

Akamai sports a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks in the broader technology sector are Western Digital (NASDAQ:WDC) and Mellanox (NASDAQ:MLNX) , both sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The projected long-term earnings growth rate for Western Digital and Mellanox are 19% and 15%, respectively.

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