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NextGen Magazine

 
 

Mastercard to Let People Pay By Blockchain

By:
Chris Gaetano
Published Date:
Oct 20, 2017
Chain

Mastercard announced that it will allow certain banks and merchants to process payments using blockchain, the same technology undergirding cryptocurrencies like Bitcoin, according to Fortune. Access to their blockchain is by invitation only, though spokespeople have said that several corporations have already signed up. Using the company's blockchain could let businesses lower the cost of cross-border payments that normally have to pass through several foreign banks, each of whom charge their own fees. By cutting out these banks, payments would not just be cheaper but faster. Unlike other blockchains, Mastercard's will not be affiliated with any cryptocurrency, as the company believes it is impractical to have to continually convert them to sovereign currencies and back again. Payments, instead, will be done only in sovereign currency. 

This is a rather ironic development (irony here used in the literary sense, not the Alanis Morisette sense) given the origins of blockchain and Bitcoin. As outlined in the paper that first described the concept, Bitcoin: A Peer-to-Peer Electronic Cash System by the pseudonymous Satoshi Nakamoto, blockchain was developed as a way to bypass financial intermediaries like Mastercard entirely. 

"Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments... What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party," said the paper's introduction. 

But these same financial institutions are, in fact, quite interested in this technology. A consortium of banks, the same ones that Nakamoto said inflate the price of transactions, has in fact poured more than $100 million in developing a blockchain of their own. The Big Four accounting firms have also expressed an interest in seeing how the technology can be applied to accounting matters. While blockchain was created to lower the influence of these financial institutions, it might end up strengthening it instead.