Today’s environment only allows MasterCard holders to make purchases in the currency that is declared as their legal tender. However, using Bitcoin as a currency option to make purchases with your credit card is closer now with the new patent announced in July 2018. MasterCard won the first patent to protect a method that will manage “fractional reserves of blockchain currencies”. This proposed exchange is said to allow for a quick exchange between the fiat currency (legal tender) and cryptocurrencies at the point of sale. The transactions themselves would use the fiat currency’s payment rails and security features, but each transaction would represent a cryptocurrency.
This is not the first patent acquired by MasterCard that is crypto-related. The question remains, when is MasterCard planning to utilize this technology? CNBC asked Seth Eisen about this and he explained, “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.”
Reports from March 2018 indicated that MasterCard would only agree to facilitate fully-regulated, central bank-issued, non-anonymous coins. “If governments look to create national digital currency we’d be very happy to look at those in a more favorable way,” Ari Sarker, Co-President of MasterCard Asia-Pacific. “So long as it’s backed by a regulator and the value …it is not anonymous, it is meeting all the regulatory requirements, I think that would be of greater interest for us to explore.”
The growing popularity and usage of blockchain currencies by consumers has gotten the attention of MasterCard and other card issuers, acquirers, and merchants. The issue remains that there is a need to improve the storage and processing capability of blockchain transactions. Digital coin transactions are reminiscent of early credit card transactions. It takes about 10 minutes for blockchain transactions versus nanoseconds for traditional payments in today’s payment landscape.
“While blockchain currencies can often provide safety and security for the payer’s information, such security may be limited for payees, particularly due to the limitations of the blockchain.” – Seth Eisen, MasterCard’s Senior Vice President of Communications
Merchants that are early adopters of consumer blockchain payments are waiting a significant amount of time for digital transactions to go through and often rely on the payer’s good faith that the payments will be valid. However, it seems like the majority of merchants are still wary of accepting blockchain currencies for products and services.
As the patent was just announced, it is still unclear if and how MasterCard’s new patent will speed up blockchain transactions by allowing cardholders to instantly pay for things using their credit cards. No products have been brought to market yet; but, we can only imagine that this is a positive sign that blockchain currencies will one day be mainstream.