Zero-Knowledge Proof–Enabled Privacy Preservation for Secure Digital Payments in FinTech Blockchain

Abstract

The explosive gains of FinTech-enabled digital payments have raised concerns about transaction privacy, the leaking of identity information and regulatory compliance on public blockchains. Existing privacy-preserving payment solutions either have a high computational overhead or do not offer controlled auditability as demanded by financial regulators. This research addresses the problem of ensuring good privacy of transactions while guaranteeing lawful transparency of decentralized payment systems. The goal is to create a blockchain payment framework that incorporates zero-knowledge proof (ZKP) which will ensure payer anonymity, transaction unlinkability and selective regulatory disclosure. The proposed method combines cryptographic identity commitments, private transaction circuits with zk-SNARK and gas optimized smart contract verification with controlled audit proofs. The framework is tested on the Private-FinPay data set that contains two million transactions. Experimental results indicate that the proposed ZKP-FinPay can achieve$\mathbf{1, 2 0 0}$transactions per second, verification latency of$\mathbf{1 2 0}$ms, anonymity set of 50,000 users, and 0.5% probability of privacy leakage, which is better than the five state-of-the-art privacypreserving payment protocols. These findings confirm the viability of regulatory-compliant privacy preservation of FinTech blockchain systems as being technically feasible and practically scalable.