Travel booking website Webjet has announced it has developed a blockchain proof-of-concept solution with Microsoft that has the potential to transform the way the entire travel industry handles online payments for hotel bookings, the companies said.

The partnership has resulted in the building of smart contracts that Webjet's managing director John Guscic said resolves issues created by data mismatches.

"Every day there are millions of transactions taking place and a single hotel stay could involve five or more transactions in the distribution chain," Guscic said in a statement.

"This marketplace can be prone to data discrepancies due to the volume of bookings passing through multiple systems. Between 5 and 10 percent of bookings can be impacted or, in other words, up to 10 billion dollars' worth of transactions."

Blockchain technology is the underlying system that facilitates bitcoin trading, but its application extends beyond simply finalising a payment. A blockchain is a shared, distributed ledger that can store the complete transaction history of not just cryptocurrency but other kinds of records.

To Gusic, the distributed ledger technology provides Webjet with a solution to data mismatch challenges and has the potential to create a new industry standard that will improve the customer experience and reduce costs, with the companies hoping to inspire others to follow their lead.

"Blockchain eliminates transaction errors by having an indisputable record of truth," Guscic added. "As we've tested the technology, we quickly realised it had the potential to improve processes with the rest of our travel partners who face similar complexities. It didn't just benefit the Webjet environment; it could potentially assist every one of our partners in the supply chain to improve their efficiency."

Microsoft said the proof-of-concept project has proven the ability to create shared, independent, and trustworthy documents that remove the risk of data inaccuracies and streamline the payment processes in a way that has reduced fraud and establishes trust and accountability.

Webjet is rolling out the blockchain platform in three phases. The first phase involves the proof-of-concept now live, with Webjet's Lots of Hotels and Sunhotels brands trialling the platform. The second will see the same brands trial blockchain's automated features, processing thousands of transactions weekly. Following this, Lots of Hotels and Sunhotels will invite selected external parties to use the platform to demonstrate the benefits it delivers to the industry.

Guscic said Webjet realised facilitating bookings through blockchain could become an additional business it could enter in the future, and also said the same technology could potentially help solve problems outside the travel industry.

"Undoubtedly, the blockchain technology built with Microsoft is an exciting opportunity for us over the next few years," he said.

In September, Microsoft launched an early version of its Azure Blockchain-as-a-Service middleware. Codenamed Project Bletchley, the fabric is meant to provide some of the missing pieces that business users might need before they start using blockchain applications.

"Microsoft is uniquely positioned in this era of massive business and societal transformation," Microsoft Azure chief technology officer Mark Russinovich said Tuesday.

"We're the company that cares most deeply about computing technologies for both people and the organisations they build. By working with Webjet to use our digital platform, together we have created an innovative blockchain solution in Australia that has the potential to not only transform the travel industry but many other industries as well."

Microsoft initially launched Azure Blockchain as a Service in November 2015. In June this year, Microsoft made a white paper about Bletchley available.

On September 20, Microsoft announced the release of Bletchley v1, a blockchain template -- accessible via the Azure Resource Manager -- aimed at helping customers and partners create private consortium Ethereum networks. Microsoft is claiming the template reduces the estimated three-week process of setting up a globally distributed multi-node consortium Ethereum network down to eight questions and five to eight minutes.

It is not just Microsoft getting behind the distributed ledger. Analyst firm Gartner has predicted that in 2017 and beyond, blockchain-based businesses will be worth $10 billion by 2022 and that the technology will revamp how transactions are conducted.

The Australian Securities Exchange (ASX) recently said its blockchain initiative is on track for a final decision in the second half of 2017, with the prototype complete and the organisation now moving to building an "industrial-strength solution" to use as its equity settlement and clearing platform.

The Sydney Stock Exchange (SSX) similarly announced a project that would see it instantly settle trades using blockchain technology with the help of Sydney-based Bit Trade Labs.

Local banks and telecommunications carriers have also made their own play with blockchain, with Australia's incumbent telco carrier Telstra announcing in September it was experimenting with a combination of blockchain and biometric security for its Internet of Things (IoT) smart home offerings.