MASTERCARD VS. VISA: BLOCKCHAIN PROJECTS | Acemyhomework Writers

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This article was first published on MintDice.com There has been a lot of buzz surrounding cryptocurrency and blockchain, mostly due to the

MASTERCARD VS. VISA: BLOCKCHAIN PROJECTS | Acemyhomework Writers

This article was first published on MintDice.com

There has been a lot of buzz surrounding cryptocurrency and blockchain, mostly due to the potential high sums of money that can be made in the industry. Recently, though, a lot of that attention has shifted to the applications of this technology across other industries.

Niches have emerged around this shift, including blockchain solutions providers, Initial Coin Offering (ICO) third parties, blockchain educators, software client developers and more. While the technology has made its way into industries such as logistics, agriculture, education, real estate, gaming technology and even commerce, the one link between them all is the finance industry.

The finance industry is mostly traditional in its approach towards global money operations and due to how sensitive the issue of money is, adoption of new technology is often slow. In fact, since American banks began issuing credit cards in 1950 and accepting electronic deposits in 1975, all new technology has been built around these events. Blockchain technology in the form of Bitcoin is perhaps the first drastic form of innovation in money handling since then.

Unfortunately, not everyone sees Bitcoin as a good thing, with several people calling it a bubble and likening it’s potential doom to the dotcom era. Either way, the buzz generated by cryptocurrency and its underlying technology is one that hasn’t been heard of in the world of finance in a long time.

The finance world is built on the concept of access to money that central authorities control. Blockchain technology, on the other hand, takes consensus away from central authorities and places it in the hands of the network users.

This ensures that people no longer have to depend on the fees associated with third-party bank clients as well as intermediaries in various industries. The concept itself goes against the way traditional banking is done in different parts of the world.

For this reason, several banks and large corporations are opposed to the mainstream adoption of blockchain technology as the future of money. It may potentially disrupt the industry, change the face of investment and banking as well as render several banking methods obsolete. This type of change would force these corporations to either embrace a blockchain-driven approach to their operations or face being left behind by the rest of the world.

As a result, some corporations like Amazon, J.P.Morgan, and IBM have already developed solutions that incorporate blockchain services into their list of operations. The third party finance solutions providers are not left behind either. Visa card and Mastercard have already been making their foray into the blockchain industry since 2016, announcing several patents and services along the way.

This move to blockchain by companies like Mastercard and Visa are even more significant because they are among the corporations that have held skeptical views regarding Bitcoin and other altcoins. This view is partly due to the lack of regulation for these coins and such companies will not back altcoins unless the government backs them. Despite their technological advancements in that direction, their views towards Bitcoin have not changed. Blockchain, on the other hand, is the underlying technology behind these cryptocurrencies and can be applied in many different ways.

Since its inception, Mastercard has played a pivotal role in the global finance industry. The financial solutions giant has been instrumental in the issuance, maintenance, and functionality of Mastercard credit cards and debit cards. It has also created innovative payment solutions like Maestro and campaigns like ‘Priceless.’

Globally, Mastercard debit and credit cards have become commonplace in the hands of citizens, irrespective of what they do. In a time when only 8% of the total money on earth exists as paper, Mastercard has carved a significant niche for itself.

Now, the company has taken huge strides towards blockchain, what several people have termed “the future of money.” Currently, Mastercard holds up to 30 Blockchain related patents including an identity verification patent, a patent for anonymous transactions and a system that links cryptocurrency with a fiat account.

Despite the progress that the company has made, it is apparent that there is still ongoing research into more innovative applications of blockchain technology within its walls. In due time, more of those applications may be brought to light.

Mastercard first emerged in 1966 as the Interbank Card Association (ICA), a group of banks came together with the aim of leading innovation in the banking sector. Subsequently, ICA acquired the Master Charge name as well as the ‘interlocking circles’ trademark and changed the Master Charge name to Mastercard.

Since its emergence, the company has reached several significant milestones. Mastercard was the first company to issue a payment card in the People’s Republic of China as well as the first company to use a laser hologram on cards and the first payments company to launch a business card.

In the 1990s, Mastercard partnered with Europay International to launch the first online debit program in the world, known as Maestro. The program was a success and has stood the test of time, just like the company itself.

Following the Maestro launch, the corporation launched its ‘Priceless’ campaign along with “Mastercard advisors”, an organization that focused on providing payment solutions and professional services on a global scale. Owing part of the success of Maestro, Mastercard integrated with Europay in 2002 to become a private share corporation.

In 2006, Mastercard made its full transition into a corporate ownership and governance structure, listing its stock on the New York Stock Exchange. Subsequently, Europay France and Mastercard Europe concluded plans to integrate their operations and Mastercard acquired Orbiscom. In 2009, the company began its plans to also acquire DataCash (the prepaid program management business of Travelex, Truaxis, and Trevica).

By 2010, the company had become one of the most innovation-driven corporations in the financial space. To further their research and technology, Mastercard Labs was established to serve as an incubator for new ideas and concepts in the industry.

Subsequently, between 2013 and 2016, Mastercard introduced its new service known as Masterpass and partnered with eServGlobal and Bics to establish HomeSend. Acquisitions made within that period include C-SAM, ElectraCard Services (ECS), Provus, 5One, Vocalink, Applied Predictive Technologies (APT), the Payment Gateway Services business of Transaction Network Services (TNS) and Pinpoint.

In 2016, Mastercard announced its first blockchain patent, marking its foray into the cryptocurrency industry despite earlier reservations. A year after Mastercard announced its acquisition of NuData Security, as well as Brighterion for the enhancement of artificial intelligence capability. In 2018, Mastercard acquired Oltio to enhance the adoption of digital payments in Africa and the Middle East. The company also partnered with IBM to create Truata, an independent trust that provides a secure approach to data analytics and anonymization.

Mastercard has filed over 30 patents for blockchain and cryptocurrency-related projects. One of the most prominent patents is for a blockchain-based payment system which promises to deliver instant payments to merchants, fast-tracking for customers and secure verification of payments.

The patent application which was termed “Method And System For Payment Card Verification Via Blockchain” recounts a method of payment processing, which uses a public blockchain to carry out the secure retrieval and verification of the users’ information.

In the patent description, Mastercard described how vulnerable the currently existing method of “wireless transmission of payment credentials” is. According to the company, bad actors can intercept this transmission, stealing users information and using it for fraudulent activities. Due to the security of the blockchain, the company will use it to convey user’s payment credentials securely, essentially protecting them from theft. Through this means, there will be “minimal participation by the consumer.”

As a result, the entire payment process will be more straightforward for the customer, killing two birds with one stone. Mastercard believes that the provision of an application that can quickly and securely convey information to the point of sale (POS) device without subjecting the customer to any form of stress, is a pressing need in the industry.

This need also extends to the fight against credit card “skimming,” a process by which bad actors pull a customer’s credentials off their cards even when they are securely hidden in a bag. The practice is so common that it can happen to anyone, irrespective of class. It also involves intercepting users’ credentials while they are in the process of being wirelessly transmitted to a POS. This means that while paying for goods using a POS device, hackers can intercept a user’s credit card details while in transit.

Credit card skimming is a massive problem that companies like Visa and Mastercard have struggled with for a long time. While there are security measures in place to prevent it, people have found new ways to bypass these security measures each time.

A report by the ATM Industry Association has shown that credit card skimming accounts for an annual loss of $2 billion globally. Skimming devices are used at gas stations, ATMs and even POS machines to steal customers’ credentials which allow them to further steal from those customers accounts.

One solution that directly tackles the problem is the use of chip cards, and even with this, the research must continue if the finance industry wants to stay ahead of such bad players. The company has adopted blockchain technology as what may hold the key to the complete eradication of skimming. This is why Mastercard has come up with so many blockchain patents, working round the clock to create these solutions.

In the patent document, Mastercard described a process to encrypt the information on users’ cards and store it on its public blockchain. Subsequently, two keys– a public and a private key– will be issued. When a user makes a purchase with such a registered card, it will trigger a retrieval request, prompting the system to use the issued keys to decrypt and verify the card information.

Following the announcement of the patent, Ann Cairns, vice chair of Mastercard stated that the company had indeed built a blockchain service that can run the whole network. According to Cairns, the company was careful to identify real use cases of its new technology. It was built with scalability in mind as well as the need to create something that not only solves technical problems but ensures a better user experience.

From Microsoft to Facebook and even IBM, blockchain, has captured the attention of several large corporations. There have been various reasons to capitalize on the technology but the most important one by far is to help improve user experience in many already existing consumer operations.

To date, Mastercard remains one of the most invested companies in blockchain and it continues to research and improve the technology with the single aim of ushering in a new future of money. A future that sees traditional money act like Bitcoin and other cryptocurrencies in both structure and function.

While the blockchain-related moves by Mastercard may have come unexpected, upon closer inspection into the company’s history, it’s not difficult to see why this direction has been taken.

All through its 50-year existence, the finance solutions giant has shown its staunch dedication to technology-driven innovation. Things like credit cards, which seem simple, took research, time and resources to create and now, most Americans have at least one credit card. Banking has become easier now than it was in the days when most of the money in existence was physical. Along the way, Mastercard has secured partnerships and acquisitions with its innovative goal in mind.

Given the company’s history, it’s safe to say that the blockchain solutions it will create, will indeed make life easier for a significant number of people. The value-driven approach taken by the company would be on a global scale.

Apart from operations, Mastercard has also developed a company culture which encourages innovation in smaller local communities with its STEM programs. Through its network of entrepreneurs and developers, the company continues to do its part to tie the world of banking and commerce together. By focusing on innovation, the company shows that despite its reservations, it will always do what is best for the consumers.

In addition to building new blockchain solutions, Mastercard has also made significant investments into other corporations that share its goal. One example is the Digital Currency Group, a collaborator, and incubator for Bitcoin and blockchain-related tech startups. The company also became a member of the Enterprise Ethereum Alliance (EEA) to broaden its scope using Ethereum’s technology. Mastercard also runs a program called Start Path Global program in which it explores new use cases of blockchain with smaller startups.

Despite blockchain’s many demonstrated use cases, its application in finance has always been critical. It is the underpinning structure that controls the functionality of a cryptocurrency like Bitcoin or Ethereum. The structure consists of a public distributed ledger that allows the currency to exist and change in value without governance or manipulation by a single authority figure. Mastercard has several notable applications, from sending and receiving money to setting budgets via voice assistants and even securely paying employees.

In June 2017, Mastercard created and patented a blockchain program that gives developers the opportunity to build applications on its API. The API is business-to-business (B2B) focused and addresses the problem areas in cross-border payments including speed and transparency.

The API supports both account-based and blockchain-based payments and opens the door to new opportunities in blockchain and a chance to work with corporations such as Apple.

According to Mastercard, there are four major areas which the API addresses:

Apart from finance, Mastercard has created and patented a blockchain solution for the travel industry. The solution comprises of a bidding platform which allows users to submit their itineraries securely so that travel service providers can bid to satisfy those customers based on the itineraries. As providers including travel companies, airlines and hotels bid, the market becomes more competitive, and users can find the most profitable bids and make plans with those providers.

The patent for the technology was approved by the US Patent and Trademark Office (USPTO) in June 2017. This technology provides a way for the global travel industry to become more streamlined and concentrated. The use of bidding ensures that travelers can adjust their itineraries according to the competitive nature of the bids they receive. This saves travelers time as well as money and increases revenue for service providers.