Mastercard is exploring ways to simplify crypto transactions, which could lead to mass adoption of this digital asset for everyday business. The American card payment giant has introduced a new initiative to evaluate the use of its Crypto Credential program. The goal of this program is to ensure that people do not send crypto assets that are not compatible with certain wallets. Mastercard enlisted crypto exchanges Bit2Me, Lirium and Mercado to help with this pilot. Crypto wallet player FoxBit has also joined the initiative.
What prompted Mastercard to launch this initiative?
Through its research, Mastercard has observed several cases of erroneous crypto transactions. Complicated wallet addresses or technical errors resulting from engagement of crypto tokens with faulty, incompatible blockchains emerged among the main reasons leading to financial losses for senders and receivers.
Because of these risks, Mastercard fears, people may stay away from crypto-based financial transactions and stay tied to online payment apps like Venmo and PayPal.
“As interest in blockchain and digital assets continues to grow around the world, it is critical to continue to provide trusted and verifiable interactions over public blockchain networks,” commented Walter Pimenta, executive vice president of product and engineering at Mastercard. development.
What will this Pilot program offer?
For transactions to be processed under this program, Mastercard will assume a centralized role and act as an intermediary to verify the user’s identity. The company will further review transactions before they are processed to ensure that the tokens being sent and the blockchain used to receive those funds are correct. Mastercard will store the KYC data of users processing transactions as part of this pilot within its own servers.
Exchanges, which are part of this pilot, will first verify the user and issue a simple alias to send and receive funds on all supported exchanges.
“When a user initiates a transfer, Mastercard Crypto Credential verifies that the recipient’s pseudonym is valid and that the recipient’s wallet supports the digital asset and associated blockchain. If the receiving wallet does not support the asset or blockchain, the sender is notified and the transaction does not proceed,” Mastercard said in a statement.
According to Mastercard, the use of its P2P initiative for crypto-credentials represents a space to expand and support the global remittance market. Founded in 1966, Mastercard is currently valued at $411.33 billion (approximately Rs. 34,23,157 crores). In recent years, the company has shown a tendency to explore crypto and blockchain avenues in the renovation of existing financial systems.
In April, Mastercard launched a crypto credit card, CBDC partner program and crypto trading initiatives. The company’s vision of crypto credentials was first presented in 2023.
However, it is important to note that Mastercard has come under attack from hackers time and time again. According to CoinTelegraph, 40 million Mastercard accounts have been hacked since 2005.
