This week MasterCard won a patent to speed up crypto payments. This indicates to the world that the credit card provider is working on a new payment processing system. If rumors are to be believed, it will allow anyone with a MasterCard to transact purely in crypto, rather than having to exchange it into fiat before the payment is processed through its system. Following the recent MasterCard outages that angered thousands of customers around the globe, enabling payments to be processed through crypto could help to resolve these issues.
How Will MasterCard Speed Up Payments?
Currently, crypto payments can take an average of 10 minutes to be processed – a time that is far from ideal for consumers and merchants alike. In its patent, MasterCard proposed to process payments using the same systems it uses for fiat transactions. The payments would still be performed in the desired cryptocurrency, but will use the same channels and payment rails that fiat uses. This gives it the ability to process transactions in nanoseconds rather than minutes, as well as with the added security fiat payments benefit from.
It All Feels a Bit Centralized
While this new payment processing system sounds good on paper, there are still a lot of questions surrounding it. By transacting crypto payments using exactly the same system, channels, and rails as with fiat, it implies that MasterCard is seeking to centralize crypto payments. This means it retains the ability to decline or freeze any payments, which goes against decentralization and the purpose of cryptocurrencies. While this may seem bad, it does add a certain degree of protection to payments. For example, if someone buys something faulty, a chargeback can be initiated to cover the cost of the goods.
MasterCard is Entering the Blockchain World
Earlier in the year MasterCard saw a 2% drop in growth and blamed it on lack of crypto interest. As the price of Bitcoin was falling, fewer people were using their MasterCard’s to purchase more crypto. While its competitors have teamed up with crypto companies – see the emerging relationship between Ripple and American Express – MasterCard seems to be going it alone. This, in turn, means we will see a slower time-to-market than with an off-the-shelf solution from a third party. This could be due to the fact Ripple is facing a hoard of lawsuits against it, or possibly MasterCard simply has a better solution and wants to perfect and develop it further. American Express has already won several patents, most recently winning a patent for a Proof-of-Payment (PoP) system. This new PoP system won’t speed up crypto transaction times, but it will unlock the door for Amex to provide a more automated B2B solution.
MasterCard might not be at the forefront of the blockchain world, but this new patent certainly puts it on the right path. We might not see a pure blockchain solution from it – like we have seen from Amex – any time soon. That being said, it is encouraging that two of the leading three payment providers are looking into the blockchain world – trying to implement blockchain technology into their products.
