Multinational payments and technology company, MasterCard, has invented a blockchain system capable of simplifying business to business (also called B2B) transactions.
In a new patent filed by the New York-based financial giant, the company believes its innovation, based on a blockchain, would go a long in simplifying B2B transactions, especially in a high volume enterprise environment.
The Blockchain System
The company in its application, which saw a series of three patents submitted for review, outlined the blockchain-based system which was made public on September 13 by the US Patent & Trademark Office (USPTO).
Citing the major issue that the invention seeks to solve, the patents authors explain in the filing how existing settlement systems, settling individual dealings and payments from end-to-end, has failed to cater efficiently to the growing and evolving needs of the 21st-century businesses.
They subsequently wrote:
“Currently, existing settlement systems often operate using the settlement of individual payment transactions. For example, after a transaction is processed, the issuing bank will transfer funds for that single transaction to the settlement network, which will then forward the funds for that single transaction on to the acquiring bank. Since most businesses are not financial firms, or financially regulated, B2B transactional innovation left payment flows between the parties intact.”
The new blockchain innovation is supposed to relieve the strain on the processing power of settlement systems and cater to the increasing fund transfers that occur during daily activities. The patent application further read:
“As a result, 21st century B2B collaboration sits on an unwieldy, unconnected and largely unchanged mid-20th century B2B payments platform. As the number of transactions being processed, and therefore settled, increases, the strain on the processing power of settlement systems and those of financial institutions increases, as well as the number of fund transfers that must occur every day.”
If B2B transactions are going to be completed efficiently, there would be the need for a ubiquitous or common method of payment; this is MasterCard’s argument. This is where a system based on the distributed ledger technology like the blockchain is set to be the most logical and efficient solution.
Distributed ledger technology (DLT), such as the blockchain, would facilitate the storage of data in a transparent and apparent format while also ensuring the security of the data without any sort of compromise whatsoever.
According to the patent, the blockchain could either be based on a public or private network. However, due to MasterCard’s unabashed and unhidden no-love-lost relationship with cryptocurrencies in the past, it is clear any consequent build of the system would be on a permitted network.