MasterCard readies for bitcoin transactions files patent
MasterCard filed a patent on Tuesday with the US Patent and Trademark Office for a “method and system for linkage of blockchain-based assets to fiat currency accounts” heralding a future where its customers can transact with bitcoin.
The payment processing giant is accepted at over 30 million merchants worldwide and this patent specifically allows for the use of centralised accounts to manage both “fractional reserves of fiat and blockchain currency” according to the filing.
Although MasterCard recognises that there has been “increased usage over traditional fiat currencies by consumers who value anonymity and security”, it also recognised the limitations of such privacy and security of the blockchain for both customers and merchants.
It noted in its publication that both are accustomed to fast transaction times but are “often either forced to wait a significant amount of time for a blockchain transaction to be conducted, or the payee must rely on the payer’s good faith that their transfer will be valid.”
The gift of an existing payment system
Further, the anonymity integral to blockchain currencies means that payees are at a serious disadvantage because the inability to identify the payer prevents renders risk or fraud detection moot. This lack of trust is a big barrier for many merchants and retailers to overcome when it comes to using bitcoin and other coins or participating in blockchain transactions.
It also cited the e-wallet and the disadvantages should an owner lose or have their electronic credentials stolen and therefore cannot establish identity and as a result have few means to recovering it.
This is where MasterCard plans to leverage its expertise in payment networks and payment processing systems to improve on the storage and processing of transactions that utilise blockchain currencies.
The existing systems for fiat currency transactions are already set up to safely store and protect both consumer and merchant information and to transmit sensitive data between computing systems. In addition, they can perform complex calculations and fraud algorithm applications and they do it quickly.
If the company is able to combine its traditional payment system technologies with blockchain currencies, it can bring the advantages of the decentralised blockchain while providing security of data and prevention of fraud and theft.
MasterCard does not yet have any products on the market and Seth Eisen, Mastercard’s senior vice president for communications said, “We’re consistently looking at ways to bring new thinking and new innovations to market to create value for us and our customers and cardholders. Patent applications are part of that process, taking steps to protect the company’s intellectual property, whether or not the idea ever comes to market.”