Information Systems Integration – Tony Messina

Mastercard Will Now Let You Pay With Blockchain—But Not Bitcoin

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Mastercard is allowing people to send money over a blockchain instead of swiping their credit card.  They are opening this service up to certain banks and merchants as an alternative and more efficient way to pay for goods.  Mastercard now joins IBM as the first two mainstream companies to implement the use of blockchain payments.  “We are not using a cryptocurrency, and we are not introducing a new cryptocurrency, because that introduces other challenges—regulatory, legal challenges,” says Justin Pinkham, a senior vice president at Mastercard Labs, who leads the credit card company’s blockchain initiatives. “If you do a payment, then what we can do is move those funds in the way that we do today in fiat currency.”  Pinkham says, “Mastercard has one advantage that the bitcoin blockchain doesn’t have: A settlement network that includes 22,000 banks and financial institutions around the world.  IBM has announced 13 banks that it plans to include in its network.  After all, companies still predominantly rely on government-issued currency to do business, making it impractical to convert cash into cryptocurrency, or vice versa, for each blockchain payment.  Even in the bitcoin system you need a bitcoin exchange that could exchange bitcoin for euro, so it creates some complications.”

Will the fact that Mastercard has moved into this market push VISA to do the same?

Will other companies wait to see if this Blockchain is successful in this space before investing?

Will consumers embrace the use of Blockchain or will it be to difficult to get people comfortable with not having to swipe their card?

 

Reference

http://www.zdnet.com/article/mastercard-opens-access-to-its-blockchain-tech/

6 Responses to Mastercard Will Now Let You Pay With Blockchain—But Not Bitcoin

  • I think this is a great idea, as now it is a big cost to transfer money between countries sometimes even just banks. I see blockchain can be the solution for easier and less costly money transfer. However, there may still be some regulation problems that banks need to work on.

  • I think Mastercard’s action is brilliant. By using blockchain technology to enhance translation efficiency and catching blockchain infrastructure niche while leaving itself from potential regulations and other unforeseeable issues in using cryptocurrency. Besides, blockchain technology is so popular now that people who even don’t quite understand it will like to catch the trend. Thus, I think Mastercard’s action will definitely push Visa to react on blockchain technology at the same time to remain its customers.

    So far, I think the benefit of using blockchain technology for financial institutes or common transactions is clear so that financial industry should invest in blockchain technology now. Using blockchain technology doesn’t necessarily mean using cryptocurrency but eliminating the intermediate third party. However, the benefits of using blockchain technology in other industries are not attractive enough at this point. Thus, companies outside from financial industry may wait longer until they see greater incentives.

  • This seems like a great use case for Blockchain technology. Mastercard’s settlement network is already in place and can act as the nodes that secure and validate the transactions. Banks can feel more comfortable to release funds for payments and will receive them more quickly on the other side of the transaction. If ultimately successful, this may be a first step towards using cryptocurrency. I believe, if the are not already, VISA will look to implement the technology for its own services. And other companies will do the same. Bringing the implementations to market may wait until after assessing Mastercard’s success, but like car companies and autonomous vehicles, I do not think companies will ignore the potential this technology has to reshape how business is conducted. Also, I think consumers will embrace this use of Blockchain. I imagine it would be akin to mobile payments and many consumers would appreciate a secure replacement to carrying physical cards and swiping them.

  • I think the fact Mastercard move to Blockchain will push VISA do the same. Since with blockchain technology banks can eliminate third parties for transaction processing and reduce transnational cost. Banks will definitely take advantage of blockchain technology for better and more efficient service. As for other companies, I do not think they will invest in blockchain technology right away, because they need to evaluate if move to blockchain aligns with company’s strategy. And consumers will accept the use of blockchain for payment. For example. Almost every one in China uses Ali-pay when they make a purchase. As long as they can use Ali-pay for payment, they rarely swipe cards.

  • I think Visa will make the same move as Mastercard. I think consumers will have mixed feelings about the use of blockchain as it is a confusing topic. However, if these companies market the fact that blockchain is a secure technology, then I feel most consumers will be on board with it especially due to the increase in data breaches.

  • I agree that Mastercard’s move will push VISA to do the same, albeit in a different method. Blockchain can be confusing for people who, like most of the population, are not familiar with it. Instead, Mastercard and VISA will most likely try to sugarcoat the process and just make it more “safer and secure” sounding in layman’s terms so customers can understand the benefit but not have to fully understand what blockchain is to buy into it. That way, it will be easier to make people comfortable with buying into blockchain.

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