Mastercard is launching a new program called the Multi Token Network (MTN). This is designed to make transactions involving digital assets and blockchain more secure, faster, and easier to use for different types of payment and commerce applications.
The company states that its vision for MTN is to “…provide a set of foundational capabilities designed to make transactions within the digital asset and blockchain ecosystems secure, scalable and interoperable — ultimately enabling more efficient payment and commerce applications.”
What the MTN Entails
In simple terms, the MTN being piloted by Mastercard has four main goals it looks to address:
- Trust in counterparty: This means making sure that the people or businesses involved in a transaction can trust each other. Mastercard is working to create common standards and infrastructure for verifying identities and permissions on blockchain networks. This will help consumers and businesses interact with confidence.
- Trust in digital payment assets: This involves creating stable, regulated, and scalable tokens for payment applications. Mastercard has already experimented with tokens representing deposits at commercial banks, and the MTN will continue to support these efforts.
- Trust in technology: This goal focuses on improving the ability of blockchain networks to handle large numbers of transactions and interact with each other effectively. Mastercard has been working with the Reserve Bank of Australia and other partners on a pilot program that shows how this can be done, and the MTN will aim to offer these capabilities more broadly.
- Trust in consumer protections: MTN will use Mastercard’s experience in setting standards and rules for its card network to create a framework that prioritizes consumer protection, stability, and regulatory compliance. This means creating clear guidelines that help ensure users are protected, and the system works smoothly.
Mastercard sees the MTN as a big step forward in its work with digital assets. It shows their commitment to creating payment solutions that are safe, easy to access, and always available. Its goal is to help build confidence in the future of the digital asset industry.
Starting in the third quarter, a test version of MTN will be available in the U.K., which will be used to develop and test applications with financial institutions, fintech companies, and central banks. Initially, the applications will use tokens that represent bank deposits and, over time, Mastercard plans to make the MTN available in other parts of the world.
An Important Initiative
Mastercard’s Multi Token Network (MTN) has the potential to be a big deal. If all goes according to plan, the payment processor anticipates making buying and selling things with digital money safer and easier. This initiative highlights the benefits afforded through the use of blockchain technology, along with demonstrating that Mastercard is serious about leveraging it for use as digital money. This could change how we use digital money, making it more common in everyday shopping, and is a big step towards making digital money a regular part of our lives.
Past Forays
It should be noted that the announcement of the MTN network is not the first foray involving digital assets undertaken by Mastercard. The following are a few notable examples from over the years, highlighting the payment processors’ long-standing interest in the sector.
- Mastercard-Bakkt Partnership: Mastercard partnered with Bakkt to offer innovative crypto and loyalty solutions. This partnership allows Mastercard customers to buy, sell, and hold cryptocurrency and also provides the option to pay with cryptocurrency through branded debit and credit cards. Additionally, Mastercard integrated cryptocurrency into its loyalty solutions, allowing partners to offer cryptocurrency as rewards and create a conversion between loyalty points and other digital assets.
- Acquisition of CipherTrace: Mastercard acquired CipherTrace, a company specializing in blockchain security, to enhance its capabilities in the digital asset space.
- Start Path Program: Mastercard launched the Start Path program, a global startup engagement initiative that supports fast-growing digital assets, blockchain, and cryptocurrency companies. The program aims to expand and accelerate innovation in the digital asset technology sector, making it safer and easier for people and institutions to buy, spend, and hold cryptocurrencies and digital assets. The program includes startups like GK8, Domain Money, Mintable, SupraOracles, STACS, Taurus, and Uphold.
- Engagement with Digital Currency Ecosystem: Mastercard has been actively engaged with the digital currency ecosystem since 2015, bridging mainstream financial principles with digital asset innovations. It supports the startup ecosystem, and more than 250 startups have participated in the Start Path program since 2014.
Looking Forward
Overall, Mastercard is using new tech like blockchain to make payments better and easier. As a result, we may soon see rival payment processors also wanting to use similar tech to stay in the game. However, when and how this occurs depends on many things like pre-existing business plans, tech skills, and the rules needed to be followed. While it is not known when this may occur, it is reasonable to expect that more companies will also make moves similar to those made by Mastercard.
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