Icelandic retailer uses Ethereum smart contracts to settle invoice

But the payment was settled in the Icelandic Krona—not crypto.

By Robert Stevens

2 min read

Global supply chain payments service Tradeshift today announced the completion of a purchase from IKEA Iceland using the Ethereum blockchain. Icelandic retailer Nordic Store bought goods from IKEA Iceland and settled the e-invoice with e-money issued by Icelandic fintech company Monerium.

The transaction used Tradeshift’s Ethereum-based platform and was settled using Iceland's fiat currency, the Krona. Tradeshift’s smart contracts generated ‘Smart Invoices’, “which are invoices that basically settle themselves,” said Gert Sylvest, co-founder of Tradeshift and GM of Tradeshift Frontiers, a digital incubation unit. 

“Unlike cryptocurrency which is volatile, e-money is a proven digital alternative to cash, regulated and redeemable on demand. Using programmable e-money in smart contracts heralds a new category of payments,” said Sveinn Valfells, co-founder and CEO of Monerium. 

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Monerium received regulatory approval to provide fiat payment services on the blockchain by the Financial Supervisory Authority of Iceland (FME) back in June. Monerium, which is backed by Consensys (which funds Decrypt), said it’s the only country authorized to issue regulated e-money on blockchain. 

“With a ‘smart invoice’ we can issue tokens that represent the future cash flow down to each dollar on the invoice. Whoever holds tokens will get paid upon due date, which makes smart invoices ideal to use for financial-services apps,” said Sylvest. 

Sylvest said this opens up a whole new way market: “Supply Chain Finance." He explained: “If you sell the tokens back to the buyer, you basically have dynamic discounting.” Tokens can also be used as collateral to finance sub-suppliers; because Monerium can issue tokens, smart contracts can issue credit to companies automatically, keeping up the cash flow. “You then avoid double-dipping finance fraud, which is when the supplier sells the same invoice two or more times, because now you can only sell a token once,” said Sylvest. 

Tradeshift already reaches over 1.5 million across 190 companies and has processed over half a trillion USD in transaction value. “Combining e-invoices with programmable money has significant global impact and outreach,” said Sylvest. But at the very least, it could be an initial step on the road to mainstream use of blockchain technology.

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