Blockchain
Innovations in Financial Services: The Mastercard Multi-Token Network
To be safe and effective at scale, a network of any type requires rules, standards and safeguards. That was true 50 years ago, when we created a payments ecosystem where all participants benefit. This is true for open banking and national interbank networks. And we demonstrate it today for the world of digital assets and programmable payments.
Last summer we announced the Mastercard multi-token network bring a set of tools and standards to power innovative new business models across various industries by leveraging tokenized bank deposits. Now, after months of beta testing, including a first-of-its-kind beta test Innovation sprintMTN’s promise is closer to realization.
With Standard Chartered Bank (Hong Kong) Limited, Mox Bank Limited AND Freewe are piloting pay for a tokenized form of carbon credits with tokenized deposits. Last year, we completed another pilot in Hong Kong this demonstrated MTN’s ability to settle digital asset transactions involving decentralized applications and concluded a similar project Australia. In all cases, our network standards and infrastructure have successfully enabled reliable transactions on the blockchain using tokenized deposits or central bank digital currencies.
MTN, which is built on our private, secure blockchain, combines the versatility of technology with the governance, compliance and convening power of Mastercard to create a platform for the next generation of financial applications. This unlocks more opportunities and capabilities to transact in the digital asset space with the balance in your bank account. Importantly, MTN is built on trust. To realize the full potential of blockchain technology and revolutionize cross-border and business-to-business payments, we believe it must be safe, secure and scalable.
Drawing on years of experience building network capabilities for banks, we offer them simple ways to apply this type of programmability to bank deposits. Banks do not need to operate a new blockchain ledger to participate in MTN; they can start with existing interfaces, such as cards, for simple use cases and can move to standards-based APIs to support more complex use cases.
Inspiring the next innovations in financial services
A range of app developers, including Coala Pay, Inveniam, Fresh Supply Co., Senken AND Vayanaamong others, they are already turning their attention to MTN, channeling the power of blockchain to transform everything from lending to carbon credits.
For example, the real estate transaction company Assist is moving the escrow process to the MTN blockchain, creating a transparent infrastructure for transferring funds. In any real estate sale, waiting for the paperwork to be completed can take weeks. Meanwhile, the down payment is trapped in escrow, where neither the buyer nor the seller can earn interest on it. The Coadjute app allows the buyer to hold the money in their bank account; a smart contract then automatically releases payment once the conditions are met.
Coadjute is also exploring automated earmarking – the process of setting aside money for a specific purpose – which is enabled by a blockchain system and combined with MTN rules that subject each party to earmarking conditions. This makes an almost impossible process simple, with transactions triggered automatically: no additional communication, no confusion, no delays. We have explored automated earmarking with the Hong Kong Monetary Authority’s (HKMA) e-HKD pilot program to successfully use smart contracts to ensure the quality and delivery of physical goods.
Couple point, a Vodafone company, is using MTN to enable more seamless and automated money movements to support their vision of device-to-device interactions, starting with EV charging payments. With the Politrade app, investors can finance fractions of invoices and sellers can automatically manage complex payment flows.
App developers are responsible for managing the complex business processes needed to facilitate payments, but their products are brought to life by MTN’s money movement building blocks, rules and security mechanisms. An application can connect to MTN and work immediately with every financial institution on the network. This creates a safe space for banks to explore new services.
What’s next?
In select countries, the MTN beta serves as a testbed for new payments and commerce features. As we bring more and more applications online, we are working in parallel to connect financial institutions to the network. It’s a virtuous cycle: as more banks join, MTN becomes more attractive to application providers, and as we integrate new applications, the benefits of the network increase for financial institutions and their corporate customers.
We expect this to take time, but we are committed to ensuring that from day one our network is valuable to all participants, enabling people and businesses around the world to transact digital assets with greater flexibility, efficiency and check.