Mastercard is one of the biggest payment platforms in the world. The company has not been left behind by the technological wave as it has been exploring various innovations to make its processes better and more efficient.
The blockchain technology is one of its best explorations so far. The company even patented an idea that partitions a blockchain to allow it to store transactional data in various types and formats. Mastercard aims at using the blockchain technology in the following areas.
One of the biggest challenges that face international payment platforms such as Mastercard is the use of false identity. The blockchain provides an immutable platform which makes it hard to manipulate data.
The identities of various players will be on the blockchain which makes verification easy and fast. The blockchain will prevent irregularities because the fabrication of data will be a thing of the past.
Blockchain at the point-of-sale
People lose money from their credit cards in a mysterious way just because someone duplicated the card details at a point of sale. Globally, people lose more than $2 billion every year to credit card skimmers. Mastercard wants to solve this predicament using the blockchain.
The platform will first encode the image of the payment card and then store it on the blockchain. There will be encryption of the card using both private and public keys. When a customer wants to pay using the card, he or she will make a retrieval request. The blockchain will then decrypt the image of the card using both the private and public key. The cardholder does not need to use the physical card which prevents ‘skimming’ at the point of sale.
Problems and Solutions
According to Mastercard’s official website, the current world does not have an efficient and effective system that proves that goods and services are what they claim to be. Such products can be forged or manipulated, and the end consumer will never know.
The website goes on further to highlight that the Mastercard Blockchain offers ‘new commerce opportunities for financial institutions and business owners to transfer digital assets on a distributed ledger’.
To show its commitments and believe in the possibilities of blockchain technology, Mastercard has joined and invested in many courses. It is a member of the Enterprise Ethereum Alliance which is known to connect Fortune 500 companies with academicians, blockchain experts, and FinTech startups.
The company has also invested in Digital Currency Group that incubates cryptocurrencies such as Bitcoin and Ripple. In April 2018, the company hired more than 175 technology developers who include blockchain experts to work in its Ireland office.
The main challenge of the blockchain technology in payment systems is its sluggishness. For example, the bitcoin blockchain platform can take up to 10 minutes to process a single transaction. On the other hand, Mastercard can handle up to 24,000 transactions every second. The scalability issue is something that developers need to look into before blockchain becomes fully mainstream.