Mastercard Reveals Its Blockchain-Powered Payment System Plans

    News and Updates

    Since the latest investigative journalism cleverly spotting Mastercard advertising to hire blockchain specialists, there has been widespread rumours rattling the gossip grapevine within the crypto space.

    No one seemed to know exactly what Mastercard was planning with only speculation as to why the global financial payment processing giant would be advertising to fill such roles within their business structure. However, finally, we have a hint of what is about to go down thanks to a recent news report on crypto-news.net confirming that Mastercard will work with R3 to create a blockchain-powered payment system.

    Before cryptocurrency investors get too excited, this is not necessarily a virtual currency system being designed here. Rather Mastercard is looking to streamline their current IT platform and possibly their infrastructure to create a more stable, smooth flowing, and cost-effective payment system. There is so far no mention of cryptocurrency payments or a crypto wallet option.

    On the flip side, this is still quite positive news for the cryptocurrency side of blockchain technologies. This most recent announcement of a partnership between the blockchain-based company R3, who manages Cordia, and Mastercard is yet more proof that large corporate firms are seeing the benefits of blockchain technology, which in turn could lead to the need for more new tokens to be issued and thus more ICOs breaking into the crypto sphere.

     

    What Does This New Partnership Mean For Cryptocurrency Investors?

     

    For someone that invests in cryptocurrency, the whole point of the success of new blockchain technologies, as well as existing systems being used by large firms such as Mastercard, is to show the world that this technology is real, and it works.

    Most of the time when the word blockchain is used, people often think ‘cryptocurrencies’. Those that see cryptos in a negative light instantly dismiss any notion of blockchain tech being introduced into their work environment. However, the reality is that blockchain tech is already becoming an integral part of our lives whether we know it or not.

    If companies such as R3 and IBM can successfully implement blockchain solutions that are not using crypto, then there is no reason why an individual or group would be dissuaded from raising capital to fund their blockchain idea via an ICO. There will come a point where the demand for IT infrastructures that are purely based on blockchain tech, and when that point comes, the market will be blown open wide.

    Ecosystems such as Bitcoin and Ethereum are likely to be used by ICOs, so we could see sudden rises in value for these cryptos and any forks connected to them.

     

    What Does MasterCard Plan To Do With Blockchain Technology?

     

    In short, Mastercard is looking for an upgrade to their business to business payment solution. The idea is to create an improved cross-border payment system that will improve connectivity on a global basis. One of their key ambitions to improve the way their system operates is by implementing an account-to-account, which is central to the company’s ambitions for this particular project.

    As Mastercard operated in what is a complex global payment infrastructure, the company has experienced issues with the way the current system works. Obviously within the world of finance time is money, and delays cost money for both Mastercard and the businesses that work with them. A blockchain-based system will eradicate delays or hold-ups because everything will be processed in real-time 24/7 using a frictionless network that is operated by Mastercard via the R3 blockchain ecosystem.

    The system will allow Mastercard customers to have an unrivalled choice on how to move their money around and will give them value-added services with low processing overheads, better liquidity management, and the system should also bridge the gap between different banks that use dissimilar processes by standardizing the way they process and deal with customer funds.

    To achieve this feat, Mastercard needs R3; a company already recognized as an advanced blockchain tech-based solutions provider.

    Using R3s experience and Mastercard’s global reach and brand, this partnership has every chance of success. It may well make a good case study for future partnerships between ICOs that already have an ecosystem in place and companies looking to streamline the way their IT systems work via the implementation of a blockchain tech-based solution.

     

    Are There Any Hints Of Cryptocurrency Support?

    For cryptocurrency investors, the only question that arises from the news of the partnership between Mastercard and R3 is: will this Mastercard system support cryptocurrencies?

    This is a fair question to ask because if Mastercard does decide to include crypto payments as an option, then this would be huge for the currencies that will be included on the system. However, right now all we can do is speculate once again.

    There was a hint that cryptos could become a part of this system which was taken from one of the points made in the press release announcing the partnership between Mastercard and R3. That point was made by Peter Klein, who is currently Mastercard’s ‘President of New Payment Platforms’.

    He said that the Mastercard’s goal is to offer “better cross-border B2B payments solution” and he said one of their goals was “to deliver global payment infrastructure choice”. In the press release by the company itself, it says that the partnership is part of its multi-rail strategy, which is a strategy that involves providing Mastercard customers with “unrivalled choice in how they move money”.

    Now speculatively speaking we could say that ‘unrivalled choice’ means that the system would need to offer business customers the chance to transfer their money across borders using currencies such as BTC, BCH, ETH, and so on.

    It would be hard to imagine Mastercard designing a system without supporting virtual currencies. With cryptos not budging and remaining stubborn over the current down cycle, or crypto winter as we like to call it, there is no sign of them going away. Therefore, it would be unwise to design a new system that ignores the very real possibility of cryptocurrencies becoming mainstream within the next decade or so.

     

    What is R3’s Role?

    R3 has multiple branches of its organization and it is already dealing with several other financial-based companies helping them use the R3 open-source code.

    It has only really been a well-known blockchain solution provider since 2016 when its Corda open-source blockchain ecosystem was released. Since then big names such as Barclays, Bank of America, Citi, Commerzbank, Royal Bank of Canada, HSBC, Deutsche Bank, Morgan Stanley, National Australia Bank, and Mitsubishi UFJ Financial Group to name but a few have used R3’s blockchain experience and knowhow.

    The company does not have a cryptocurrency attached to it, so it is important to understand that this is not an ICO. Instead, it operates under the name R3 LLC.

    Its success can be attributed to its Cordia CorDapps. These blockchain tech apps are currently being used in not only the financial services (trading, banking, insurance) industry, but are also operational in the healthcare industry and used by companies that control digital assets.

    If Mastercard implements the R3 technology, then all banks that connect to Mastercard will suddenly have to adapt to a uniform system. Right now, many banks and businesses around the world use their own custom systems which can be difficult when one bank or business deals with another and both have entirely different systems and sets of processes.

    For example, in Thailand banks still, use SWIFT codes while most banks today are starting to use International Bank Account Numbers (IBAN). Some bank applications do not build in SWIFT codes as an option for their personal banking or business customers as an option. This can make transferring money between the two countries difficult and slow down the entire process. It is these kinds of situations that R3 can help Mastercard solve.

    Smart contracts will be the main standardization of the system, which is something R3 mention quite often as one of the main plus points to their ecosystem.

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