MasterCard is trying to patent the blockchain for money transfer solutions

MasterCard is embracing the tech behind blockchain to power it’s new super-fast, super-secure payments systems.

MasterCard’s tech isn’t specifically using a blockchain system in the same sense that Bitcoin and Ethereum both use one, but it’s clearly inspired by the technology. In a new patent filed on 9 November, MasterCard is planning for a “Method and System for Instantaneous Payment Using Recorded Guarantees”. In short, this is a system that uses a blockchain-like ledger to manage international transactions instantaneously.

MasterCard’s proposed technology is described in the patent as:

“A method for processing a guaranteed electronic transaction, includes: storing account profile, each include an account number and balance; receiving a transaction message from an acquiring financial institution via a payment network, the message including a specific account number, transaction amount, and payment guarantee data; identifying a specific account profile that includes the specific account number; deducting the transaction amount from the account balance in the specific account profile; generating a record of payment guarantee that includes the transaction amount and data associated with the payment guarantee data; generating a return message including a response code indicating transaction approval and data associated with the generated record; transmitting the generated record to a computing system via a communication network; and transmitting the generated return message to the acquiring financial institution via the payment network.”

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MasterCard makes no mention of Bitcoin or cryptocurrencies in its patent, but it does briefly suggest the tech is leaning rather heavily on blockchain processes. The patent explicitly describes a step where “the payment guarantee data stored in the third data element included in the received transaction message includes at least a blockchain network identifier and (i) a public key or (ii) a destination address.” In slightly simpler terms, this equates to each transaction requiring a key and a payment address, similar to how Bitcoin and other cryptocurrencies require wallet addresses and user keys.

The patent then goes on to further describe the process, explaining that “the record of payment guarantee is a blockchain transaction for payment of the transaction amount stored in the second data element included in the received transaction message to (i) the destination address or (ii) a destination address associated with the public key.” Again, this confusing jargon-filled legal sentence actually equates to the second part of your standard cryptocurrency-style transaction.

Finally, MasterCard explains that all of this is processed in a decentralised blockchain instead of on a computer at a transaction point – something that differentiates it from your standard transaction. “The computing system is a node in a blockchain network corresponding to the blockchain network identifier.”

If all of that seems confusing, that’s because it is. Patents are hardly known for being written in plain English, but combine that with the technological jargon hurdles of blockchain, and you’re in for a disaster. However, this loosely translates to MasterCard using a blockchain to securely store transaction information in a way that’s totally infallible.

MasterCard’s interest in blockchain isn’t anything new. When the technology rose to prominence on a wave of mainstream interest in Bitcoin, many traditional fintech companies jumped aboard to stake out the technology. While Bitcoin has become bloated due to some poor decisions and ever-increasing activity, the blockchain technology at the heart of it all works like a dream, and finance companies know that.

It’s arguable that Bitcoin and blockchain creator Satoshi Nakamoto already knew this would come to pass. He knew that Bitcoin was simply something to get people interested in the real technology that mattered: the blockchain. MasterCard’s latest patent shows that FIAT transactions could work well on a blockchain model. Time will tell if MasterCard sees this patent as anything more than just securing the technology for themselves before someone else jumps on it.