Bitcoin credit cards? Mastercard patent suggests it's possible

Technology would speed up blockchain currency transactions

John Egan
Personal Finance Writer
Writes trendy stories about credit cards.

Mastercard bitcoin patent

A new patent issued to credit card giant Mastercard could mean bitcoin becomes much more than a bit player for credit card holders. 

The patent covers a method for “managing fractional reserves of blockchain currency,” such as bitcoin, according to a filing with the U.S. Patent and Trademark Office. Translation: A consumer someday could use a credit card to pay in virtual currency like bitcoin, rather than traditional currency like U.S. dollars. 

“We’re consistently looking at ways to bring new thinking and new innovations to market to create value for us and our customers and cardholders,” says Seth Eisen, Mastercard’s senior vice president of communications. “At Mastercard, patent applications are part of that process, a step we take to protect the company’s intellectual property, whether or not the idea ever comes to market.” 

No word from Mastercard on when it might roll out a bitcoin-enabled credit card. 

“I won’t speculate on what may or may not happen in the future,” Eisen says.

Currently, Mastercard and other major credit card companies regularly decline to process cryptocurrency-backed transactions, as bitcoin and other variations of virtual money aren’t regulated like traditional currency is. Also, a slew of major issuers, including Bank of America, Chase and Citigroup, have blocked the purchase of bitcoin and other cryptocurrency with their credit cards. 

See related: Buy bitcoin with credit cards? Big banks say 'no'

Andy LaPointe, a cryptocurrency “coach” at Bitcoin Learning Centers and author of “How to Be a Successful and Disciplined Crypto Trader,” says Mastercard’s action helps legitimize bitcoin and other cryptocurrency as a payment alternative. 

“Mass adoption is always the biggest challenge for new technology,” he says. “However, Mastercard may have just solved this issue for bitcoin and other cryptocurrencies to be widely used by individuals and merchants.” 

As you’d expect, Mastercard’s patent filing makes the case for cryptocurrency. The filing says that currencies relying on blockchain – a massive high-tech database for digital transactions – “offer consumers a currency that is decentralized and relatively anonymous and secure in its use.” 

For instance, a blockchain transaction might not require any information about the sender or recipient of the currency, thus concealing the identities of both parties. 

“Such an aspect of blockchain transactions may be highly desirable for consumers that wish to maintain their privacy,” the patent filing points out, “and may help reduce the likelihood of fraud due to theft of their information.” 

See related: Why you should NOT buy bitcoin with credit cards

The patent document also outlines drawbacks of today’s blockchain transactions. For instance, it often takes about 10 minutes for a blockchain transaction to be completed, given the time needed to verify and update blockchain data. By contrast, a standard credit card transaction happens in a flash. 

“As a result, consumers and merchants that are accustomed to fast transaction times are often either forced to wait a significant amount of time for a blockchain transaction to be conducted,” the patent filing says, “or the payee must rely on the payer’s good faith that their transfer will be valid.” 

In light of the inability to identify a cryptocurrency sender, some retailers and other providers of goods and services might be reluctant to accept bitcoin and other virtual currency, according to the filing. 

Additionally, consumers might be hesitant to embrace blockchain transactions, given the relative lack of knowledge about cryptocurrency as well as its anonymous nature, the filing says. 

However, the filing boasts that Mastercard’s newly developed way of processing cryptocurrency transactions offers “significant improvement” over the current method of processing such transactions. How? By essentially marrying traditional payment technology with blockchain technology and allowing secure, speedy transactions. 

“Thanks to Mastercard, bitcoin, cryptocurrencies and blockchain-based payments will soon be widely used by individuals and accepted by merchants within a few years,” LaPointe predicts.

 

A new patent issued to credit card giant Mastercard could mean bitcoin becomes much more than a bit player for credit card holders.

 

The patent covers a method for “managing fractional reserves of blockchain currency,” such as bitcoin, according to a filing with the U.S. Patent and Trademark Office. Translation: A consumer someday could use a credit card to pay in virtual currency like bitcoin, rather than traditional currency like U.S. dollars.

 

“We’re consistently looking at ways to bring new thinking and new innovations to market to create value for us and our customers and cardholders,” says Seth Eisen, Mastercard’s senior vice president of communications. “At Mastercard, patent applications are part of that process, a step we take to protect the company’s intellectual property, whether or not the idea ever comes to market.”

 

No word from Mastercard on when it might roll out a bitcoin-enabled credit card.

 

“If we were to bring a formal program to market, we’d share that information at that time,” Eisen says. “I won’t speculate on what may or may not happen in the future.”

 

In the present day, Mastercard and other major credit card companies regularly decline to process cryptocurrency-backed transactions, as bitcoin and other variations of virtual money aren’t regulated like traditional currency is. Also, a slew of major issuers like Bank of America, Chase and Citigroup have blocked the purchase of bitcoin and other cryptocurrency with credit cards.

 

Andy LaPointe, a cryptocurrency “coach” at Bitcoin Learning Centers and author of “How to Be a Successful and Disciplined Crypto Trader,” says Mastercard’s action helps legitimize bitcoin and other cryptocurrency as a payment alternative.

 

“Mass adoption is always the biggest challenge for new technology, he says. “However, Mastercard may have just solved this issue for bitcoin and other cryptocurrencies to be widely used by individuals and merchants.”

 

As you’d expect, Mastercard’s patent filing makes the case for cryptocurrency. The filing says that currencies relying on blockchain – a massive high-tech database for digital transactions – “offer consumers a currency that is decentralized and relatively anonymous and secure in its use.”

 

For instance, a blockchain transaction might not require any information about the sender or recipient of the currency, thus concealing the identities of both parties.

 

“Such an aspect of blockchain transactions may be highly desirable for consumers that wish to maintain their privacy,” the patent filing points out, “and may help reduce the likelihood of fraud due to theft of their information.”

 

The patent document also outlines drawbacks of today’s blockchain transactions. For instance, it often takes about 10 minutes for a blockchain transaction to be completed, given the time needed to verify and update blockchain data. By contrast, a standard credit card transaction happens in a flash.

 

“As a result, consumers and merchants that are accustomed to fast transaction times are often either forced to wait a significant amount of time for a blockchain transaction to be conducted,” the patent filing says, “or the payee must rely on the payer’s good faith that their transfer will be valid.”

 

In light of the inability to identify a cryptocurrency sender, some retailers and other providers of goods and services might be reluctant to accept bitcoin and other virtual currency, according to the filing.

 

Additionally, consumers might be hesitant to embrace blockchain transactions, given the relative lack of knowledge about cryptocurrency as well as its anonymous nature, the filing says.

 

However, the filing boasts that Mastercard’s newly developed way of processing cryptocurrency transactions offers “significant improvement” over the current method of processing such transactions. How? By essentially marrying traditional payment technology with blockchain technology and allowing secure, speedy transactions.

 

“Thanks to Mastercard, bitcoin, cryptocurrencies and blockchain-based payments will soon be widely used by individuals and accepted by merchants within a few years,” LaPointe predicts


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Updated: 10-23-2018