Mastercard and R3, a blockchain software provider, announced that they would be working together to create a pilot program that will use blockchain technology to enable international payments. The solution is going to combine Mastercard’s payment system with the expertise that R3 has in the blockchain space.

The main goal is to limit the cost of processing payments and to deal with the problem of cross-border payments between banks and clearinghouses. To create this solution, the partnership will rely on the Corda platform developed by R3. Thus far, there are over 300 hundred of the world’s largest financial firms, regulators, and tech companies taking part in this platform.

This effort could help Mastercard to compete with Visa’s blockchain-based solution that uses the DLT  know as Visa B2B Connect. With this partnership, the focus will be on business-to-business transactions. According to an official from the company, they intend to create an international B2B payment solution that is more efficient.

An official from R3 said they were excited to help find solutions for the digital payments sector. He noted that while there were already solutions for the international payments industry, most of them were complex and expensive.  R3 hopes to reduce the complexity and cost of making international payments.

In the US alone, B2B payments are worth around $21 trillion annually. Thus, Mastercard’s focus on providing payment solutions in this sector is warranted. The Visa solution went live in June and Mastercard may already be feeling the competition. Thus, opting to create this solution was the right choice. The Visa solution focuses on using the DLT to facilitate transactions between financial firms globally and eliminate some of the problems they currently face.  By partnering with R3, Mastercard could take a slice of the pie from Visa and grow its cross-border B2B transaction volumes.

Part of Mastercard’s Efforts to Utilize Noncard Rails

The first effort that Mastercard made in this cross-border industry is when it bought Transfast, an international payments company, at the start of 2019. This move is intended to help Mastercard capture more volumes. It is worth noting that the cross-border payments industry is expected to expand by about $10 trillion in the next 5 years. There is thus a lot of potential in the sector. It is expected that large companies will make up about 87% of the transactions by 2024. With this purchase, MasterCard has been able to grow revenue from its cross-border payments service.

Mastercard has been trying to grow its noncard business for years. In line with this goal, it has purchased a few companies. One of them is Vocalink, which the company bought in 2016. A few other purchases have made it possible for the company to expand outside of cards. However, it still needs to make more effort if it is serious about providing noncard solutions to its clients. Its competitors are already doing so. The company seems to be aware of this and it is making a lot of investment in this sector.

Ripple Has Been Linked To R3 & Corda 

As of right now it’s evident that Mastercard is experimenting with Blockchain tech in the payments space. If Mastercard ever decides to experiment moving money on the blockchain with cryptocurrency, you could argue that Ripples XRP is right on deck.. Ripple has been closely affiliated to both R3 & Corda. If we go back in time, we can remember that R3 introduced a Corda payment application that integrated XRP. Earlier this year there were also reports that Mastercard had been investing in Ripple-based firm “Sendfriend”. Finally, we also saw Mastercard attempting to purchase Earthport which was another firm that utilized Ripple technologies. In all these scenarios, Ripple/XRP are evident. One could conclude that some opportunities could arise for XRP if the Mastercard and R3 partnership goes well on the Blockchain side.

Image Source: r3 Twitter 

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