Visa, Mastercard and the future of cryptocurrencies

Despite previously dismissing cryptocurrencies as a tool for fraud and criminal activity, Mastercard and Visa appear to be warming up to the idea.

In a patent application – application 20180308092– filed Thursday, October 25th, it appears that Mastercard is looking to apply the principles of fractional reserve banking to crypto assets, or as the credit card giant phrased it, “blockchain currencies.”

The move, which seems counterintuitive to many in the crypto space, would allow Mastercard to use cryptocurrencies in a similar fashion to fiat currencies, wherein only a fraction of deposits are backed by actual assets.

Could Mastercard Create A Crypto Credit Network?

In its application, Mastercard describes a growing desire for anonymity and security in financial transactions, but suggests that currently, blockchain technology is not yet efficient enough to maintain the security of the payee while traditional fiat transactions are.

In the application, Mastercard wrote:

“There is a need to improve on the storage and processing of transactions that utilize blockchain currencies. Existing payment networks and payment processing systems that utilize fiat currency are specially designed and configured to safely store and protect consumer and merchant information and credentials and to transmit sensitive data between computing systems. In addition, existing payment systems are often configured to perform complex calculations, risk assessments, and fraud algorithm applications extremely fast, as to ensure quick processing of fiat currency transactions. Accordingly, the use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information and provide a strong defense against fraud and theft.”

The application went on to describe what will likely be a cryptocurrency credit card network, utilizing both crypto assets and fiat currency.

Though patents for projects that never materialize are filled frequently, the move by Mastercard, which previously cited crime and fraud as a reason to not use cryptocurrencies, could suggest the company is opening up to the new asset class.

Visa CEO Chimes In

In an interview with former hedge fund manager and notorious crypto skeptic, Jim Cramer, Visa’s CEO, Al Kelly, weighed in on the subject of cryptocurrencies.

Cramer, who once claimed that the ‘sun was setting’ on the crypto space, asked Kelly if cryptocurrencies posed a threat to Visa’s payment empire. Kelly responded, saying, “Certainly not in the short to medium-term in any way, as I think that [the market needs to actually believe] that crypto is moving from being a commodity to really being a payment instrument.”

Kelly did mention, however, that if cryptocurrencies were to take off, that Visa would, of course, adapt.

“If we have to go there (cryptocurrency), we will go there, but right now, its more of a commodity than a payment vehicle.”


While neither Visa nor Mastercard have made any major moves to integrate cryptocurrencies into their operations just yet, Mastercard’s patent application suggests that such a move could be on the horizon.

Growing institutional interest in the space has dominated the conversations surrounding the health of the industry in 2018, but the technological advancements cannot be ignored either.

With new off-chain solutions for Bitcoin, mainnet launches of competing blockchains, and improvements on other established cryptocurrencies, the crypto-space is still has a lot of promise, despite depressed prices.

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