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Mastercard Thinks Blockchain Can Simplify B2B Transactions in New Patent


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Financial services giant Mastercard has invented a blockchain system that it believes can simplify business-to-business (B2B) transactions in a high-volume enterprise environment.

That system is outlined in a series of three patent applications filed by the New York-based multinational firm in March, made public on Thursday by the US Patent & Trademark Office (USPTO).

Writing in one filing, the patent authors explain that existing settlement systems, which settle individual transactions from end-to-end, do not scale well to the needs of 21st-century businesses.

“Currently, existing settlement systems often operate using the settlement of individual payment transactions. For example, after a transaction is processed, the issuing bank will transfer funds for that single transaction to the settlement network, which will then forward the funds for that single transaction on to the acquiring bank. Since most businesses are not financial firms, or financially regulated, B2B transactional innovation left payment flows between the parties intact,” they wrote.

“As a result, 21st century B2B collaboration sits on an unwieldy, unconnected and largely unchanged mid-20th century B2B payments platform. As the number of transactions being processed, and therefore settled, increases, the strain on the processing power of settlement systems and those of financial institutions increases, as well as the number of fund transfers that must occur every day.”

Mastercard argues that there is a need for a uniform payment system that will allow businesses to execute B2B transactions more efficiently, and the firm believes a blockchain or other type of digital ledger could be an ideal solution for such an inter-enterprise settlement system.

A blockchain, the patent authors note, would allow data to be stored in the system in a clear format that is easily accessible and auditable by connected firms while also remaining highly-resistant to tampering. These features would be quite beneficial, particularly given that most of the participants would not themselves be financial institutions.

The patent notes that the system could be built on either a public or private blockchain, but, if Mastercard actually does attempt to build it, it’s likely that it would exist on a permissioned network.

That’s because, as CCN reported, Mastercard CEO Ajay Banga, has a long history of bashing public, decentralized cryptocurrencies. In July, he said that these assets are “junk,” adding that he would only be interested in a digital currency developed by the government.

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