Mastercard Launches Pilot Initiative to Combat User Errors in Crypto Transfers
Mastercard is exploring ways to simplify crypto transactions, which could lead to mass adoption of the digital asset for everyday businesses. The US-based card payment giant has launched a new initiative to assess the use of its Crypto Credential program. The goal of this program is to ensure that people are not sending crypto assets that are not compatible with certain wallets. Crypto exchanges Bit2Me, Lirium and Mercado have been brought on board by Mastercard to assist with this pilot. Crypto wallet player FoxBit has also joined the initiative.
What prompted Mastercard to launch this initiative?
Mastercard noticed multiple cases of erroneous crypto transactions during its investigation. Complicated wallet addresses or technical errors caused by the involvement of crypto tokens in wrong, incompatible blockchains emerged as the main reasons leading to financial losses for senders and receivers.
Mastercard fears that these risks could drive people away from crypto-based financial transactions and remain stuck with online payment apps like Venmo and PayPal.
“As interest in blockchain and digital assets continues to grow globally, it is critical to continue delivering trusted and verifiable interactions across public blockchain networks,” said Walter Pimenta, executive vice president of product and engineering at Mastercard. quoted as a comment on the development.
What does this pilot program offer?
For transactions processed as part of this program, Mastercard will take on a centralized role and act as an intermediary to verify a user’s identity. The company will further pre-screen transactions before they are processed to ensure that the tokens being sent and the blockchain used to receive these funds are correct. Mastercard will store the KYC data of users processing transactions as part of this pilot on its own servers.
The exchanges participating in this pilot will first verify a user and then issue a simple alias to send and receive funds across all supported exchanges.
“When a user initiates a transfer, Mastercard Crypto Credential verifies that the recipient’s alias is valid and that the recipient’s wallet supports the digital asset and its associated blockchain. If the receiving wallet does not support the asset or blockchain, the sender is notified and the transaction does not proceed,” Mastercard said in his statement.
According to Mastercard, the use of its crypto credential P2P initiative represents the scope to expand and support the global remittance market. Founded in 1966, Mastercard today has a valuation of $411.33 billion (approximately Rs. 34,23,157 crore). In recent years, the company has shown an inclination to explore crypto and blockchain opportunities in revamping the existing financial systems.
In April, Mastercard launched a crypto credit card, CBDC partner program and crypto trading initiatives. The company’s crypto credential vision was first revealed in 2023.
It is notable, however, that Mastercard has been the victim of hackers time and time again. According to Cointelegraph, 40 million Mastercard accounts have been hacked since 2005.
