Mastercard is one of the biggest credit card companies in the world. With such a strong stance in traditional finance, it isn’t surprising that Mastercard never expected the impact and the opportunity that blockchain technology would create. As such, they started their relationship with a lot of skepticism and negativity, even as they examined how much it could ultimately do for them.
The opinion of Mastercard on blockchain technology has since evolved into something “good.” After a few years of maintaining the opinion that cryptocurrencies are directly tied in with criminal activity, Mastercard has taken a turn. Now, instead of attacking crypto, they are working on establishing a patent that would provide them with fractional reserve management of blockchain assets.
Anyone that knows the history of cryptocurrency is probably seeing some red flags, considering that one of the issues that Bitcoin was supposed to fix is fractional reserve banking. Most crypto enthusiasts would rather see this type of banking completely erased from the financial industry, and they don’t appreciate currency that is founded in debt. As such, Bitcoin and other cryptocurrencies are allegedly sound money.
The application from Mastercard outlines a new system that will monitor both crypto and fiat assets, basically acting as a web wallet. The patent says,
“Thus, there is a need to improve on the storage and processing of transactions that utilize blockchain currencies. Existing payment networks and payment processing systems that utilize fiat currency are specially designed and configured to safely store and protect consumer and merchant information and credentials and to transmit sensitive data between computing systems. In addition, existing payment systems are often configured to perform complex calculations, risk assessments, and fraud algorithm applications extremely fast, as to ensure quick processing of fiat currency transactions. Accordingly, the use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information and provide a strong defense against fraud and theft.”
Mastercard seems to believe that there is a lot to be gained in combining crypto tech with traditional tech, and their system would most likely include the current payment networks and products in place.
The patent continued, explaining,
“Transactions that may be performed via a payment network may include product or service purchases, credit purchases, debit transactions, fund transfers, account withdrawals, etc. Payment networks may be configured to perform transactions via cash-substitutes, which may include payment cards, letters of credit, checks, transaction accounts, etc.”
Right now, the optimal goal is to simply improve the role that Mastercard has kept for all this time – transaction processor. Just like the way that funds can be moved around any platform after a deposit clears, Mastercard wants to give the same benefit to merchants as well. Even though this type of banking has had a poor reputation in the past, Mastercard stands to truly make a different in the crypto economy with the option for millions of current clients to allow crypto payments.