BlockchainBusiness & Finance

MasterCard Granted a Patent to Speedup Cryptocurrency Transactions

International payment service provider, MasterCard, has been granted a patent for the method of speeding up cryptocurrency transactions to make them more feasible for merchants to accept digital currency. This method and the system is for linkage of blockchain-based assets to fiat currency accounts and accepting MasterCard for crypto transactions that’ll make buying and selling of cryptocurrency more convenient for its rapidly growing user base.

The United States patent and trademark office (USPTO)

USPTO is the federal agency for granting U.S. patents and registering trademarks. In doing this, USPTO fulfills the mandate of Article I, Section 8, Clause 8, of the Constitution that states;

Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

The USPTO advises the president of the United States, secretary of commerce and U.S. government agencies on intellectual property (IP) policy, protection, enforcement and promotes the stronger and more effective IP protection around the world. The USPTO is at the cutting edge of the nation’s technological progress and achievement.

Major problem of transaction time

In cryptocurrency, it can take a while for transactions to complete, on an average of 10 minutes and this is a major problem when it comes to transaction through credit card. MasterCard proposed a solution to the problem and won a patent for their solution. The patent that was filed stated:

Cryptocurrencies are currently at a disadvantage to conventional or fiat currencies because of the longer processing time that is required for blockchain-based transactions. It often takes a significant amount of time of around ten minutes, for a blockchain-based transaction to be processed. On the other hand, fiat and conventional currencies have processing times that are measured in nanoseconds. That is one of the major reasons merchants, retailers, service providers, and other purveyors of goods and services are wary of accepting cryptocurrency for products and dealing in blockchain transactions.

Solution proposed by MasterCard

That seems to be the real problem that MasterCard is trying to resolve and proposed a system whereby a person would hold fiat currency in one account and cryptocurrency in another, and these would be tied together by an “account profile”. That account profile will be able to make a transaction like transfer of cryptocurrency from one client to another using the same systems as are already in place for fiat currencies.

Existing payment networks and payment processing systems that utilise 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.MasterCard

Currently, MasterCard holders can only pay through fiat currency or the currency that the government has declared as legal. Having said that, there has been increased usage of digital currencies by customers and they consider the value of anonymity and security. While blockchain currencies can often provide such anonymity, safety and security for the payer’s information, such security may be limited for payees, particularly due to the limitations of the blockchain.

The possible solution for this problem to reduce the transaction time is to improve on the storage. Processing of transactions that utilize blockchain currencies and to reduce these transaction times, the company would be offering a new type of user account that will be able to transact in cryptocurrencies through existing systems for fiat currencies. This account will link a series of profiles able to identify a user’s fiat currency amount, a blockchain currency amount, an account identifier and an address.The transactions would use the fiat currency’s payment rails and security features, but each transaction would represent a cryptocurrency. This system will practically cut down on the time it takes for blockchain-based payments to go through between two accounts.

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 the security of account information and provide a strong defense against fraud and theft. Content of The Patent

MasterCard also adds that by processing transactions made with cryptocurrencies in this way, “payment networks may be able to evaluate the likelihood of fraud and assess risks for blockchain transactions using existing fraud and risk algorithms and information that is available to payment networks, such as historical fiat and blockchain transaction data, credit bureau data, demographic information, etc., that is unavailable for use in blockchain networks.”

Patent abstract

A method for managing fractional reserves of blockchain currency includes:

  • Storing in a first central account, a fiat amount associated with a fiat currency.
  • Storing in a second central account, a blockchain amount associated with a blockchain currency.
  • Storing a plurality of account profiles, each profile including a fiat currency amount, blockchain currency amount, account identifier and address.
  • Receiving a transaction message associated with a payment transaction, the message being formatted based on one or more standards including a plurality of data elements, a data element reserved for private use including a specific address and a transaction amount.
  • Identifying a specific account profile that includes the specific address included in the data element in the received transaction message and updating the blockchain currency amount included in the identified specific account profile based on the transaction amount included in the data element in the received transaction message.

This is not the first time MasterCard has expressed interest in addressing consumer protection in the space of crypto, they had already applied for a separate patent last year to launch refund services for cryptocurrency transactions.

Muhmmad Furqan

Furqan is a financial markets expert. A regular trader of cryptocurrencies and hold some investments in Bitcoin, Stellar, IOTA and OST. Contributes with latest industry insights. Contact the editor at

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