Last Monday, 100 Deloitte employees lined up to buy coffee and cupcakes from a selection of vendors.

While unlikely to be news on its own, Deloitte's team just wasn't using any payment method to transact – payments were faciliated via a contactless payment card connceted to a blockchain-based system.

Created and developed by UK blockchain startup SETL, the trial showcased how blockchain technology could come to be integrated into the retail shopping experience – without altering the payment habits of consumers.

For the trial, customer funds were deposited in a Metro Bank client account, issued to individual accounts on the SETL blockchain and tied to user identities created and verified on Deloitte’s own blockchain ID system, formally unveiled earlier this month.

Payments were instantly processed, and the customer and merchant balances updated in real time, features that Anthony Culligan (founder and product CEO of SETL) said could bring benefits to bank and merchant customers if widely deployed.

Culligan told CoinDesk.

One of the first mainstream examples of the use of blockchain in a retail payment card transaction, the trial could be viewed as taking an alternative route to providing many of the benefits digital currencies may have provided if widely adopted by merchants.

Expected to go into production by 2018, the system was created for UK retail bank Metro Bank and took place under the FCA's 'regulatory sandbox'.

Aimed at encouraging the wider use of financial technology, the scheme allows FinTech companies to test new products and services in a live environment, but under regulator supervision.

Although the trial was in many ways a small affair, it is perhaps best thought of as a showcase for both SETL's proprietary blockchain technology.

By more effectively creating connections between parties in the value chain, SETL's system could ultimately provide an 80% reduction on fees that merchants currently pay, Culligan said.

But the system could also be of great benefit to so called 'challenger banks' – small banks trying to gain traction in the market, and that often have difficulty competing due to their reliance on contracting card clearing services through their larger rivals at a fee.

Culligan explained that here, SETL and its partners would need a network of participants to see the true benefits of its design.

"Our idea is to offer something that will be useful not just for one bank, but for many participants…as an alternative to the incumbent big banks, and which is significantly cheaper to use than existing payment networks," said Culligan.

Facilitating the partnership between SETL and Metro Bank is just one of the ventures in which Deloitte has promoted the use of blockchain technology in recent years.

David Myers, head of capital markets at Deloitte, explained that the SETL trial is just one way in which a blockchain identity service could be integrated in more financial systems.

"On the digital identity side, our findings are that financial services are in a position to lead the charge here," Myers said. "You don’t have to look hard to see this [as an answer to] the AML and KYC related matters which banks have been facing for quite some time.”

Deloitte developed the Smart ID project as a solution to this, Myers said, since many of its banking clients face large costs and technical challenges due to remediation procedures necessitated by KYC rules.

But, even with banks and merchants as the primary beneficiaries from blockchain based card payments, those involved argue reductions in card transaction processing fees should ultimately be passed on to customers.

Greater competition in the banking sector could also be welcomed by UK customers, given that the largest high street banks such as RBS, Barclays and HSBC currently rate among the lowest for customer satisfaction.

Cupcake frosting via Shutterstock