Mastercard locks up a potentially game-changing patent

Mastercard patent

On July 17, the U.S. Patent and Trademark Office awarded a patent to Mastercard that would provide “for linkage of blockchain-based assets to fiat currency accounts.”

As noted in the background section of the patent, blockchain currencies have “seen increased usage over traditional fiat currencies by consumers who value anonymity and security.” However, the limitations of blockchain are also noted, with traditional payment networks having processing times measured in nanoseconds, whereas blockchain transactions can take a significant amount of time to verify. This inconsistency could persuade businesses and consumers to shy away from blockchain currencies.

The solution offered by Mastercard is a hybrid system that’ll incorporate blockchain currencies, but allow them to be transacted on traditional payment channels. Why stick with traditional payment channels and not use blockchain? For starters, it’s all about speed. Mastercard believes that using traditional channels would allow transactions involving cryptocurrency to be processed considerably faster than with blockchain.

More importantly, Mastercard has copious amounts of data on fraud and risk that it’s evaluated on existing networks that would come in handy. As noted in the patent filing, “payment networks may be able to evaluate the likelihood of fraud and assess risk for blockchain transactions using existing fraud and risk algorithms and information that is available to payment networks, such as historical fiat and blockchain transaction data, credit bureau data, demographic information, etc., that is unavailable for use in blockchain networks.”

To be clear, Mastercard hasn’t unveiled any products as of yet that accomplish the objectives outlined by this patent. However, it does appear to be in the driver’s seat to bridge the gap between fiat currencies and cryptocurrencies, should the latter continue to gain mainstream acceptance. That makes Mastercard a major player worth eyeing as the cryptocurrency space matures.


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