The card giant Mastercard and the bank JP Morgan announced on Thursday (21) a partnership to facilitate international payments between companies, with a model that uses blockchain to reduce the costs of operations and make them faster.
The operation will combine individual solutions that each company has already developed: Mastercard will connect its blockchain-based system for transferring assets, the Multi-Token Network (MTN), to JP’s digital asset business called Kinexys.
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In a note, the two companies explained that the partnership aims to improve international B2B payments, that is, between companies, “providing greater transparency and faster settlement, as well as reducing time zone friction”.
According to the companies, both MTN and Kinexys already provide solutions designed to improve the efficiency of commercial transactions. They aim to improve cross-border payment experiences by providing greater transparency and faster settlement.
Blockchain is a distributed ledger technology that functions as a public, shared and immutable ledger. It emerged together with Bitcoin, but it does not need cryptocurrencies to function. As main advantages, the technology provides more security and transparency for operations registered with it.
Currently, the main model used for this type of transfer is SWIFT (acronym for Society for Worldwide Interbank Financial Telecommunication, or Society for Worldwide Interbank Financial Telecommunication, in free translation), a cooperative that brings together more than 11 thousand financial institutions in around 200 countries to facilitate operations that occur across borders.
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Despite streamlining transfers after its creation in 1973, SWIFT is still a model that depends on several steps and agents. In short, when a company needs to transfer money to a company in another country, it needs to provide the bank with the SWIFT code, which has between eight and eleven characters, and the international account number, with 34 digits.
The bank from which the payment will come sends a message to the institution that will receive the payment with all this information. The receiving bank then authorizes the transfer and a third entity (usually a bank or broker) makes the payment. SWIFT therefore only transfers data, not values.
Now, with the partnership between Mastercard and JPMorgan, customers will be able to settle commercial transactions through a single system integration, reducing the risk of errors in operations, as well as making them even faster.
“By uniting the power and connectivity of Mastercard’s MTN with Kinexys Digital Payments, we are unlocking greater speed and settlement capabilities for the entire value chain. We are excited about this integration and the new use cases it will bring to life,” said Raj Dhamodharan, Executive Vice President of Blockchain and Digital Assets at Mastercard.
