R3 and Mastercard Team Up Mastercard to Build Overseas Payments System Build on Blockchain

Blockchain-enabled model to further support banks to deliver a single frictionless real-time payments proposition. Mastercard will act as the network operator to process, clear and settle international payments

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Mastercard and R3, a leading enterprise blockchain software provider, have today announced a strategic partnership to develop and pilot a new blockchain-enabled cross-border payments solution that will initially focus on connecting global faster payments infrastructures, schemes and banks supported by a clearing and settlement network operated by Mastercard.

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The fear cycle around blockchain is dissipating, according to Sheila Warren, Head of the Blockchain at the World Economic Forum. 

“It’s exciting to see tech giants publicly owning their explorations of blockchain technology. This kind of validation should help to cement the idea that this technology is here to stay. Companies not contemplating their potential should spend some cycles familiarizing themselves with it.”

“At the same time, the types of use cases are primarily in the payment arena, reflecting the technology’s relative maturity in that space. We expect to see more public declarations going forward as the fear around this technology dissipates and we continue to move along the hype cycle.”

Earlier this year, Mastercard strengthened its cross-border network reach with its acquisition of Transfast. Today’s announcement complements the company’s formidable capabilities by providing access to R3’s Corda ecosystem, which includes more than 300 of the world’s leading financial services firms, technology companies, central banks, regulators and trade associations.

 

Peter Klein, executive vice president of New Payment Platforms for Mastercard, commented:

“Developing a new and better cross-border B2B payments solution by improving worldwide connectivity in the account-to-account space is central to Mastercard’s ambition. Our goal is to deliver global payment infrastructure choice and connectivity as demonstrated through our recent strategic acquisitions and partnerships, including our relationship with R3. It confirms our commitment to innovation, both home-grown and through partnerships and acquisitions, to support advances and innovation in the increasingly complex global payment infrastructure space.”

The partnership is the latest step in Mastercard’s multi-rail strategy, providing customers with an unrivalled choice in how they move money. By combining R3’s expertise in blockchain with Mastercard’s existing payment systems assets, brand and distribution, the partnership will provide increasingly innovative, value-add services for customers, addressing factors such as high processing overheads, liquidity management and the existing lack of standardization and processes between banks and domestic clearing systems.

David E. Rutter, CEO of R3, added:

“We are excited to partner with Mastercard to help shape the future of the digital payments ecosystem. All institutions – large or small – rely on the ability to send and receive payments, but all too often the technology they rely upon is cumbersome and expensive. Cross-border payments can be a particular pain point. Corda was designed specifically for enterprise use cases such as this, and we look forward to supporting Mastercard in bringing blockchain-enabled payments businesses across the globe.”

Filipe Castro, Co-Founder, and CIO at UTRUST, the cryptocurrency payment solution offering instant transactions, told Blockchain News:

“This partnership demonstrates Mastercard’s intent to leverage blockchain technology to gain a competitive advantage. This is not Mastercard’s first foray into blockchain. Their first implementation with DLT was not in the world of payments but in the verification of the provenance of luxury goods. In payments and beyond, it is not the first blockchain project where Mastercard is involved – e.g., the creation of a blockchain for verifying the provenance of luxury goods.”

“Many companies are experimenting with the more cutting-edge implementations of blockchain technology, creating standalone internal units and investing in promising startups dealing with cryptoassets. These investments are driven by a need to protect against disruptive change, innovate their models and tackle a sector of high growth at a time of stagnating interest rates.”

“Payments are a killer app for blockchain, unlike any other due to their mass appeal – a use-case that is especially relevant for the mainstream adoption of digital currencies as a means of payment. In an age of fast information & instant feedback, where digital and physical augment each other, a universally trusted, verifiable and privacy-conscious means of value transmission will play a pivotal role. This follows the same cycle of continuous technology evolution we have seen in the early ages of the internet. In the same way, email or the browser were killer apps of the early internet age, relying on protocols and foundations of years prior. Those, in turn, led to the next wave of killer apps – search engines, social networks, mobile-centric apps and more. All of those had implications beyond just technology, tackling specific segments – be it productivity, communication or human relations. This time is money itself.”

Sky Guo, CEO, and Co-Founder of Cypherium, the enterprise-ready blockchain solution – also commented to Blockchain News.

“We have seen a number of major financial corporations enter the blockchain space in a similar fashion, and MasterCard follows suit. The difficulty here has been distinguishing institutional recognition of this valuable technology from corporate appropriation.”

“On one hand, we can’t survive as new financial systems without meaningful recognition from and conversation with legacy systems, such as MasterCard and other centralized goliaths. On the other hand, these technologies—especially the public blockchains—pose a very real threat to the business models of a number of these companies, and in order to quell their disruption, giants like MasterCard want to absorb crypto projects on their own terms.” 

“Ultimately, if blockchains scale to their full extent, there will be little need for the kind of private DLTs JPMorgan, Facebook, and now MasterCard propose. The true killer Dapp will make obsolete these private networks; it will be faster and cheaper to use while returning financial economy to its users; that is the promise of Bitcoin that so many new chains are trying to fulfill. So one can see that their motivation in entering the space is, at least partially, guided by their need to street the conversation, to dictate the way in which blockchain technology enters the world. For now, though, blockchain must support and participate in these projects.”

Further commenting, Charles Lu, CEO of Stanford-laden startup Findora said:

“While it’s not clear yet whether the proposed initiatives will go beyond proof-of-concept, the news that Mastercard is to develop a blockchain-based cross-border payments platform is a welcome move.”

“Tech giants such as Mastercard play an influential role in encouraging the acceptance of cutting-edge technologies and this news is symbolic of Mastercard’s willingness to challenge the status quo and seek solutions to improve current payment systems.”

“Change is on the horizon and, as technology continues to evolve, we are witnessing cryptographic breakthroughs including zero-knowledge proofs, multiparty computation, and scalability solutions — all of which have the potential to shake up the financial industry as we know it.”

R3 is an enterprise blockchain software firm working with a global ecosystem of more than 300 participants across multiple industries from both the private and public sectors to develop on Corda, its open-source blockchain platform, and Corda Enterprise, a commercial version of Corda for enterprise usage.

R3’s global team of over 200 professionals in 13 countries is supported by over 2,000 technology, financial, and legal experts drawn from its vibrant ecosystem. The Corda platform is already being used in industries from financial services to healthcare, shipping, insurance and more. It records, manages and executes institutions’ financial agreements in perfect synchrony with their peers, creating a world of frictionless commerce. 

Mastercard is a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. 

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About Richard Kastelein

Founder and publisher of industry publication Blockchain News (EST 2015), a partner at ICO services collective Token.Agency ($750m+ and 90+ ICOs and STOs), director of education company Blockchain Partners (Oracle Partner) – Vancouver native Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur. He sits on the advisory boards of some two dozen Blockchain startups and has written over 1500 articles on Blockchain technology and startups at Blockchain News and has also published pioneering articles on ICOs in Harvard Business Review and Venturebeat. Irish Tech News put him in the top 10 Token Architects in Europe.

Kastelein has an Ad Honorem - Honorary Ph.D. and is Chair Professor of Blockchain at China's first Blockchain University in Nanchang at the Jiangxi Ahead Institute of Software and Technology. In 2018 he was invited to and attended University of Oxford's Saïd Business School for Business Automation 4.0 programme.  Over a half a decade experience judging and rewarding some 1000+ innovation projects as an EU expert for the European Commission's SME Instrument programme as a startup assessor and as a startup judge for the UK government's Innovate UK division.

Kastelein has spoken (keynotes & panels) on Blockchain technology in Amsterdam, Antwerp, Barcelona, Beijing, Brussels, Bucharest, Dubai, Eindhoven, Gdansk, Groningen, the Hague, Helsinki, London (5x), Manchester, Minsk, Nairobi, Nanchang, Prague, San Mateo, San Francisco, Santa Clara (2x), Shanghai, Singapore (3x), Tel Aviv, Utrecht, Venice, Visakhapatnam, Zwolle and Zurich.

He is a Canadian (Dutch/Irish/English/Métis) whose writing career has ranged from the Canadian Native Press (Arctic) to the Caribbean & Europe. He's written occasionally for Harvard Business Review, Wired, Venturebeat, The Guardian and Virgin.com, and his work and ideas have been translated into Dutch, Greek, Polish, German and French. A journalist by trade, an entrepreneur and adventurer at heart, Kastelein's professional career has ranged from political publishing to TV technology, boatbuilding to judging startups, skippering yachts to marketing and more as he's travelled for nearly 30 years as a Canadian expatriate living around the world. In his 20s, he sailed around the world on small yachts and wrote a series of travel articles called, 'The Hitchhiker's Guide to the Seas' travelling by hitching rides on yachts (1989) in major travel and yachting publications. He currently lives in Groningen, Netherlands where he's raising three teenage daughters with his wife and sailing partner, Wieke Beenen.

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