The disruption caused by cryptocurrencies and the blockchain technology in the global financial market has drawn the envy of many, especially the global banking institutions and some payment processing giant like MasterCard. The reason is simple! Cryptocurrencies and blockchain have been challenging the modus operandi and status quo of the traditional financial institutions! In the past, MasterCard was an ardent critic of cryptocurrencies and blockchain. At one time, the company refused to acknowledge the potential of blockchain, and is CEO also calling cryptocurrencies as junk!
The Tables Have Finally Turned
Despite continuous criticism coming from all ends, cryptocurrencies have managed to penetrate the mainstream financial market. So neglecting it outrightly was certainly not an option for MasterCard! In fact, the payment processing giant has been filing several patents in this space.
The latest patent filing from MasterCard shows the company to be working on Fractional Reserve Banking for cryptocurrencies. The patent document explains that MasterCard was merchants to interact with “blockchain currencies” using a new method which involves simultaneous fiat and crypto storage. More specifically, it will be a web wallet with a combination of crypto and fiat.
The patent notes that MasterCard is willing to apply the concepts of fiat banking systems to cryptocurrency storage. MasterCard says that the existing payment networks and processing systems for fiat currencies “are specially designed and configured to safely store and protect consumer and merchant information and credentials and to transmit sensitive data between computing systems.”
Furthermore, the existing payment systems configuration can handle risk assessment, fraud algorithm applications, and complex calculations extremely fast.
The patent further notes, “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 the security of account information and provide a strong defense against fraud and theft.”
MasterCard Presents Some Benefits of Mixing Traditional and Crypto Technologies
MasterCard says that there are a lot of benefits if we combine the traditional and crypto tech. The company says that this new system will also include its proven and robust payment network and products.
“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.”
However, one thing we need to acknowledge is that the latest patent highlights the process of getting crypto payments into the mainstream. Currently, cryptocurrencies are mainly used as assets or investment tools.
Moreover, this is not for the first time that MasterCard has filed patents in crypto and blockchain space. Earlier this year in July, MasterCard got a patent for reducing cryptocurrency transactions times. Last month in September, the company talked about leveraging the blockchain technology to its optimum potential.