There has been a lot of buzz surrounding cryptocurrency and blockchain, mostly due to the potential high sums of money that can be made in the industry. Recently, though, a lot of that attention has shifted to the applications of this technology across other industries.
Niches have emerged around this shift, including blockchain solutions providers, Initial Coin Offering (ICO) third parties, blockchain educators, software client developers and more. While the technology has made its way into industries such as logistics, agriculture, education, real estate, gaming technology and even commerce, the one link between them all is the finance industry.
The finance industry is mostly traditional in its approach towards global money operations and due to how sensitive the issue of money is, adoption of new technology is often slow. In fact, since American banks began issuing credit cards in 1950 and accepting electronic deposits in 1975, all new technology has been built around these events. Blockchain technology in the form of Bitcoin is perhaps the first drastic form of innovation in money handling since then.
Unfortunately, not everyone sees Bitcoin as a good thing, with several people calling it a bubble and likening it’s potential doom to the dotcom era. Either way, the buzz generated by cryptocurrency and its underlying technology is one that hasn’t been heard of in the world of finance in a long time.
The finance world is built on the concept of access to money that central authorities control. Blockchain technology, on the other hand, takes consensus away from central authorities and places it in the hands of the network users.
This ensures that people no longer have to depend on the fees associated with third-party bank clients as well as intermediaries in various industries. The concept itself goes against the way traditional banking is done in different parts of the world.
For this reason, several banks and large corporations are opposed to the mainstream adoption of blockchain technology as the future of money. It may potentially disrupt the industry, change the face of investment and banking as well as render several banking methods obsolete. This type of change would force these corporations to either embrace a blockchain-driven approach to their operations or face being left behind by the rest of the world.
As a result, some corporations like Amazon, J.P.Morgan, and IBM have already developed solutions that incorporate blockchain services into their list of operations. The third party finance solutions providers are not left behind either. Visa card and Mastercard have already been making their foray into the blockchain industry since 2016, announcing several patents and services along the way.
This move to blockchain by companies like Mastercard and Visa are even more significant because they are among the corporations that have held skeptical views regarding Bitcoin and other altcoins. This view is partly due to the lack of regulation for these coins and such companies will not back altcoins unless the government backs them. Despite their technological advancements in that direction, their views towards Bitcoin have not changed. Blockchain, on the other hand, is the underlying technology behind these cryptocurrencies and can be applied in many different ways.
Mastercard Blockchain Projects
Since its inception, Mastercard has played a pivotal role in the global finance industry. The financial solutions giant has been instrumental in the issuance, maintenance, and functionality of Mastercard credit cards and debit cards. It has also created innovative payment solutions like Maestro and campaigns like ‘Priceless.’
Mastercard first emerged in 1966 as the Interbank Card Association (ICA), a group of banks came together with the aim of leading innovation in the banking sector. Subsequently, ICA acquired the Master Charge name as well as the ‘interlocking circles’ trademark and changed the Master Charge name to Mastercard.
Since its emergence, the company has reached several significant milestones. Mastercard was the first company to issue a payment card in the People’s Republic of China as well as the first company to use a laser hologram on cards and the first payments company to launch a business card.
Mastercard has filed over 30 patents for blockchain and cryptocurrency-related projects. One of the most prominent patents is for a blockchain-based payment system which promises to deliver instant payments to merchants, fast-tracking for customers and secure verification of payments.
The patent application which was termed “Method And System For Payment Card Verification Via Blockchain” recounts a method of payment processing, which uses a public blockchain to carry out the secure retrieval and verification of the users’ information.
The Problem of Skimming
Credit card skimming is a massive problem that companies like Visa and Mastercard have struggled with for a long time. While there are security measures in place to prevent it, people have found new ways to bypass these security measures each time.
A report by the ATM Industry Association has shown that credit card skimming accounts for an annual loss of $2 billion globally. Skimming devices are used at gas stations, ATMs and even POS machines to steal customers’ credentials which allow them to further steal from those customers accounts.
How Will the Application Work?
In the patent document, Mastercard described a process to encrypt the information on users’ cards and store it on its public blockchain. Subsequently, two keys– a public and a private key– will be issued. When a user makes a purchase with such a registered card, it will trigger a retrieval request, prompting the system to use the issued keys to decrypt and verify the card information.
Mastercard and Innovation
While the blockchain-related moves by Mastercard may have come unexpected, upon closer inspection into the company’s history, it’s not difficult to see why this direction has been taken.
All through its 50-year existence, the finance solutions giant has shown its staunch dedication to technology-driven innovation. Things like credit cards, which seem simple, took research, time and resources to create and now, most Americans have at least one credit card. Banking has become easier now than it was in the days when most of the money in existence was physical. Along the way, Mastercard has secured partnerships and acquisitions with its innovative goal in mind.
Mastercard Blockchain vs. Visa Blockchain
While both corporations have decided to adopt and apply blockchain technology, there is a significant difference between the problems that each one is trying to solve.