Mastercard/Crypto

Mastercard Wins Patent for Speeding Up Crypto Payments

Mastercard won a U.S. patent on Tuesday for a method of speeding up cryptocurrency payments.

The document, published July 17 by the U.S. Patent and Trademark Office (USPTO), explains that though cryptocurrencies have "seen increased usage over traditional fiat currencies by consumers who value anonymity and security," the wide disparity in payment processing times between the two classes of assets puts cryptocurrencies at a "disadvantage."

"There is a need to improve on the storage and processing of transactions that utilize blockchain currencies," the patent claims.

It goes on to explain:

"It often takes a significant amount of time, around ten minutes, for a blockchain-based transaction to be processed ... Conversely, traditional fiat payment transactions that are processed using payment networks often have processing times that are measured in nanoseconds … Therefore, many entities, particularly merchants, retailers, service providers, and other purveyors of goods and services, may be wary of accepting blockchain currency for products and participating in blockchain transactions."

To reduce these transaction times, the company would be offering a new type of user account able to transact in cryptocurrencies through existing systems for fiat currencies. This account would link a series of profiles able to identify a user's "fiat currency amount, a blockchain currency amount, an account identifier and an address."

The transactions themselves would use the fiat currency's payment rails and security features, but each transaction would represent a cryptocurrency.

Mastercard also adds that by processing transactions made with cryptocurrencies in this way, "payment networks may be able to evaluate the likelihood of fraud and assess risk for blockchain transactions using existing fraud and risk algorithms and information that is available to payment networks, such as historical fiat and blockchain transaction data, credit bureau data, demographic information, etc., that is unavailable for use in blockchain networks."

Indeed, this is not the first time Mastercard has expressed interest in addressing consumer protection in the space of crypto, having applied for a separate patent last year looking at building refund services for cryptocurrency transactions.