Mastercard’s patent to ease high-volume B2B transactions

The US Patent and Trademark Office (USPTO) has published three patent applications in which MasterCard is proposing to develop a blockchain-based system that helps simplify B2B transactions.

In the patent applications, Mastercard details the challenges of existing B2B transactional systems where, for instance, even as the supplying business is left to their own costly efforts to determine credit risk of new customers, real visibility into customer payment intent, adjustments to payment, or timing of payments; the buyer also must maintain bank accounts of the supplier and may face higher bank fees for multiple payers. This occurs mainly due to the disconnected nature of these payment and settlement systems.

Mastercard identifies the need for updating existing B2B settlement systems to cater for current business needs. It says that because most companies currently use “individual payment transactions” systems, B2B collaboration in the 21st century " sits on an unwieldy, unconnected and largely unchanged mid-20th century B2B payments platform." It adds that the increase in the number of transactions and settlement is placing an increased strain on the processing power of settlement systems and the number of transfers that must take place every day.

Thus the patent proposes a method of helping unify, ease transactions, and reduce strain on B2B settlement schemes. The system would use distributed ledgers that are immutable and resistant to tampering and which would be easily auditable by parties participating in the transactions.

It is not their first but one among the many patents they have on blockchain and cryptocurrencies. For instance, the company was recently granted a patent that proposes a method of speeding up cryptocurrency transactions. In this new patent, Mastercard shows the challenge in modern cryptocurrency systems saying that they are at a "disadvantage" given the " wide disparity in payment processing times between the two classes of assets (traditional fiat and cryptocurrencies)." Thus the patent aims at unifying the two.

The patent says that because blockchains have payment networks whose transactions are often measured in seconds while traditional fiat payment networks have processing times measured in nanoseconds; merchants, retailers, service providers, and other purveyors of goods and services may shy away from accepting blockchain currency or participating in blockchain transactions. Thus Mastercard said it would help solve the problem by offering a new type of user account that can enable users to transact crypto through existing systems for fiat currencies.

The account would link profiles that can identify a user's "fiat currency amount, blockchain currency amount, account identifier and address." Although the transactions would use the fiat currency's payment rails and security features, each transaction would represent a cryptocurrency.

The patent adds that blockchains would be able to use the information existing on current fiat networks such as historical fiat and blockchain transaction data, credit bureau data, demographic information, etc. in order to evaluate fraud and risk for blockchain transactions.