Mastercard Launches Multi-Token Network for Blockchain Transactions

Mastercard is making significant strides in advancing its blockchain and cryptocurrency initiatives with the launch of its Multi-Token Network (MTN) in 2023. The MTN aims to replicate the success of its traditional payment systems in the digital sphere, providing robust infrastructure for digital asset transactions that serve consumers, merchants, and financial institutions. By leveraging its global presence, Mastercard seeks to standardize digital asset transactions, ensuring interoperability across different financial ecosystems. The goal is to develop a platform similar to popular peer-to-peer payment applications, which could revolutionize the way users interact with blockchain technology.

Mastercard’s executive vice president of blockchain and digital assets, Raj Dhamodharan, highlighted that the crypto space still lacks a fully compliant framework or consumer experience comparable to Venmo or Zelle in the US. To achieve seamless compliance and user experience, the Multi-Token Network combines on-chain and off-chain asset flows, built on Mastercard’s private blockchain. This introduces digital asset functionality into commercial bank money, leveraging Mastercard’s extensive experience in governance and safety standards.

The use cases for financial institutions include tokenizing customer deposits and managing their entire lifecycle, such as minting, burning, and transferring tokens. Application providers benefit from secure tokenized deposit transactions and faster payments, potentially enabling 24/7 real-time interbank settlement without the need for complex blockchain integration. The programmability of the network also makes complex payment orchestration easier, enabling new business models and seamless digital asset commerce, such as trading in tokenized assets.

Mastercard has been committed to blockchain technology since 2015, investing heavily and filing more than 250 blockchain-oriented patents. The company has also funded 43 blockchain startups through its accelerator program. Strategic partnerships with JPMorgan Chase and Standard Chartered are exploring cross-border payments and carbon credit tokenization. A key objective for Mastercard is connecting the fiat and cryptocurrency worlds for its millions of users, having launched more than 100 crypto-themed card programs worldwide. The partnership with FintechOS combines capabilities with the power of Mastercard’s extensive scale and reach to streamline the movement of funds between the two worlds of finance.

Despite significant progress, challenges remain, including concerns about the real-world market valuation of blockchain usage and security risks tied to digital assets. However, Mastercard is thoughtfully assessing these risks and has seen more favorable conditions for regulatory clarity. The company’s strategy suggests a bullish outlook on the future of blockchain, actively recruiting talent to build that future. Dhamodharan emphasized that the current environment for crypto is fast-moving and dynamic, and Mastercard’s push towards a Venmo-like crypto experience is a serious strategic move that addresses adoption hurdles and leverages its established strengths.