Mastercard, the American payments giant, has initiated its ventures into blockchain technology by filing a patent outlining a blockchain based payments platform. To allow users and companies to track crypto, process transactions while making use of a fractional banking system.
As outlined in the patent :
Accordingly, the use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information and provide a strong defense against fraud and theft.
Essentially the technology proposed by the payment processor is set to help facilitate faster transactions safely.
“Transactions that may be performed via a payment network may include product or service purchases, credit purchases, debit transactions, fund transfers, account withdrawals, etc. Payment networks may be configured to perform transactions via cash-substitutes, which may include payment cards, letters of credit, checks, transaction accounts, etc.”
The fractional banking system
The fractional banking system is what’s used by the majority of fiat banks currently in operation. By accepting deposits from users these banks can initially build up a reserve. However at any point only a fraction of deposit liabilities, the total amount of funds held liable for withdrawal, are actually in possession of the bank. While the system has the advantage of growing much faster and helping to stimulate the local economy. However operating on a permanent debt system has drawn criticism with bitcoin being held as a alternative as providing users with private keys, they have complete control and access to all of their funds at all times.
To conclude, Mastercard have begun their campaign to integrate blockchain technology into a traditional fractional banking reserve system. Further allowing companies to instantly accept payments, the blockchain network will be used to clear payments considerably faster when compared to traditional delays of hours or days on large transactions.