The distributed ledger technology is increasingly achieving a better position in the Financial Industry, being supported by major international companies. In this aspect, the most emblematic adoption of this technology happened in October 2017 and was surprisingly made by MasterCard, the American multinational financial services corporation, who will begin to use blockchain technology for fiat money transactions.
Reported by the company and the media, MasterCard intends to develop its own version of blockchain, so their business customers can make payments to other entities without having to use their plastic cards.
The main objective of MasterCard with its private blockchain is to boost the international payments for the different companies affiliated to their platform, which represents up to 22,000 financial institutions. The major change comes at a time of security distress around to world, reason why MasterCard is looking to improve security, transparency, privacy and the audibility of the network at lower costs.
Additionally, MasterCard will differentiate itself from other market proposals because they will not work with a cryptocurrency due to the legal challenges that represent an adoption of these financial tools. Therefore, the private blockchain MasterCard will only work transferring fiat money, as established by their VP:
“We are not using cryptocurrencies, and we are not presenting a new cryptocurrency, because that introduces other challenges: regulatory and legal challenges. If you make a payment, then what we can do is move those funds the way we do today in fiduciary money.”
Justin Pinkham
Senior Vice president, MasterCard Labs
Although it is not yet enabled, the MasterCard blockchain is known to be a private format, so you will need a special invitation to be use it. Most likely, only their most selective companies will be able to do so at the beginning. Also, the product API is enabled on the MasterCard Developers platform.
On the other hand, the company also stated that it does not consider Bitcoin and the other cryptocurrencies a threat to the credit cards usage because the services offered by them are “safer”:
“Frankly, we believe that card payments are simple, safe and easy to use, and better meet the needs of consumers, that a payment on cryptocurrency.”
Justin Pinkham
Senior Vice president, MasterCard Labs
MasterCard already owns 35 patents related to distributed technologies and has also invested in the Digital Currency Group. Visa, their most immediate competitor, is also experimenting with blockchain from the hand of the Startup Chain to develop a platform adapted to their needs. Undoubtedly an industry that everyday is increasingly committed to disrupted technologies.
