Mastercard has taken yet another step forward after going through a silent period, with the new integrated system facilitating blockchain payments. This latest business oriented service from Mastercard targets banks and traders to empower across the border payments in the region. This will challenge the cryptocurrency market as several companies have already signed up for the new Mastercard enabled service that work with local currencies. The senior vice president Justin Pinkham of Mastercard Labs made a clear statement that this will not be another cryptocurrency. Also, this will be in line with government regulations making it perfectly legal. The payments will be handled in the same way fiat currency is handled by the systems.
According to Enterprise Ethereum Alliance foundation, running the Ethereum blockchain platform, Mastercard has been operating in the blockchain having applied for Information Transaction Infrastructure patent last January 2017. The United States Patent and Trademark Office (USPTO) governed by the United States Department of Commerce published this patent of Mastercard in August 2017.
Recently, reports of currency intervention came into play when Mastercard used a special way to handle centralized currencies on a distributed ledger system. There are over 20,000 institutions including banks, insurance companies that have been invested by Mastercard across the globe. It is evident that Mastercard will not go for a cryptocurrency solution at least for the time being, as most of the transactions will be handled using the country’s standard currency, simplifying things and making it legally secure. This will overcome the disadvantage of requiring having a bitcoin exchange system for doing transactions with cryptocurrency. Pinkham sees this as a great merge of the blockchain payment support and the payment settlement gateway of Mastercard.
Foreign exchange allowing across the border transactions usually goes through several bank and other transaction systems, deducting service charges, fees and other taxes. Mastercard brings into the table a great deal in this regard, integrating the system allowing direct transactions between the bank of the buyer and the seller. Further, this will cut off unwanted intrusions by other parties that control or support these transactions in a conventional manner.
When comparing the efficiency of the conventional and the Mastercard system, it however takes the same time for transactions. This is due to the fact that bank verification is still necessary for the blockchain payment to go through. The central administration in the bank still needs to approve and transfer the transactional value to the account. The new Mastercard system can be beneficial in future when handling luxury goods, knowing the origin of the goods and to validate the goods. Pinkham believes that this step by Mastercard has created a positive trend as people always find they can easily and conveniently pay through a card, rather than using traditional local currency or cryptocurrency.