Mastercard and enterprise blockchain technology company R3 have announced a strategic partnership to develop and pilot a blockchain-enabled cross-border payments solution. The announcement follows initiatives by Visa and American Express that also exploit distributed ledger technology.
The new scheme will initially focus on connecting global faster payments infrastructures, schemes and banks supported by a clearing and settlement network operated by Mastercard.
Earlier this year, Mastercard strengthened its cross-border network reach with its acquisition of Transfast. This announcement complements the company’s capabilities by providing access to R3’s Corda ecosystem, which includes more than 300 of the world’s financial services firms, technology companies, central banks, regulators and trade associations.
Mastercard says that the partnership is the latest step in its multi-rail strategy, providing customers with unrivalled choice in how they move money. By combining R3’s expertise in blockchain with Mastercard’s existing payment systems assets, brand and distribution, the partnership is designed to provide increasingly innovative, value add services for customers, addressing factors such as high processing overheads, liquidity management and the existing lack of standardization and processes between banks and domestic clearing systems.
Distributed ledger technology – known as blockchain when transactions are verified by cryptocurrency ‘miners’ – is an increasingly important technology for global payments companies. Just three months ago, Visa launched a non-card-based platform, B2B Connect, for cross-border commercial payments. The network is designed to expedite transactions directly from an origin bank to a beneficiary bank. The platform’s digital identity feature tokenises a corporation’s business information, such as banking details and account numbers, with a unique identifier to facilitate transactions on the network.
American Express is also trialling blockchain-style technology, having announced last year that it was working with Hyperledger to put its membership rewards programme onto blockchain.