MasterCard has just been granted a patent by the United States Patent and Trademark Office that may now signal the payment processor giant’s entry into the cryptocurrency space.
Filed originally in May by Mastercard International Incorporated on behalf of inventor Steven Davis, the patent details a novel accounting system in which payments are effectuated from a debit card that is itself tied to a crypto-currency account. This crypto account is in turn underwritten by a second, fiat-denominated guarantor account to act as an insurance mechanism against sudden, volatile movements in crypto-currency prices at the point of payment.
Volatility has been identified as the core obstacle for traditional payment processors, banks and retailers that have demonstrated an interest in the crypto-currency phenomenon.
Solutions that have thus far been explored by traditional institutions include so-called stable coins that are pegged to the US dollar in order to counteract the notoriously unpredictable price movements of virtual currencies.
However, stable-coin solutions which seek to peg themselves against traditional fiat currencies generally require an enormous injection of funds. From the point of view of any crypto-based payment mechanism, this implies a potentially expensive obstacle for any pegging approach which seeks to scale as a global payment solution.
Mastercard’s approach, on the other hand, appears to solve the stable coin scaling issue – in theory, at least – by placing the responsibility of underwriting crypto payments with fiat back on the owner of the source transaction.
There has as yet been no comment by Mastercard on the patent grant, nor any confirmation with respect to its long-terms plans for the patent itself.