Mastercard

Solutions Providers

There are a few reasons why Mastercard is investing resources in exploring crosschain interoperability:

1. Staying competitive - Mastercard has to keep innovating in the payments space as new technologies emerge fast. Developing solutions like MTN could help retain its competitive edge.

2. New revenue opportunities - Offering infrastructure and services related to regulated cross-chain transactions and assets creates new revenue streams for Mastercard.

3. Engaging crypto ecosystem - Initiatives like MTN allow Mastercard to engage with and expand into the emerging crypto/blockchain ecosystem in a compliant manner.

4. Customer expectations - Like banks and merchants, Mastercard's customers are exploring blockchain use cases. MTN could help meet their evolving needs.

5. Technology leadership - Pioneering compliant blockchain infrastructure could help reinforce Mastercard's image as a technology leader in payments.

6. Preparing for CBDCs - As central banks pilot CBDCs, Mastercard needs to enable CBDCs to work within its existing network and solutions.

7. Interoperability imperative - Enabling interoperability between traditional and blockchain-based financial systems is key to provides a seamless experience and leverage network effect.

8. Responsible innovation - Mastercard can innovate in digital assets in a regulated way, balancing innovation with compliance.

1. Problems/Challenges it aims to solve

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Addresses four key issues in the digital asset landscape including:

• Lack of confidence in counterparty compliance

• Lack of trust in the underlying store of value

• Lack of interoperability between networks

• Lack of clear governance procedures to set the rules of the road for participants.

2. Solutions

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Mastercard Multi-Token Network (MTN): MTN is a network overlay across multiple blockchains to enable compliant transaction with validated counterparties. It provides a set of foundational capabilities designed to make transactions within digital asset and blockchain ecosystems more secure, scalable and interoperable — ultimately enabling more efficient payment and commerce applications. MTN will leverage Mastercard Crypto Credential, a solution announced in April, to establish common verification standards and infrastructure.

Services provided:

• MTN Governance Framework

  • Compliance monitoring

  • Network governance

• Access to Stable and Regulated Money-like Assets

  • Collateralized stablecoins

  • CBDCs

  • Tokenized deposits

• MTN Wrapping Service

  • Secure cross-chain transactions: Facilitates secure transactions across different blockchain ecosystems

  • No need to share bank or VASP: Allows for seamless transactions even if users do not share the same VASP or bank

  • Seamless transactions between providers: Enhances interoperability between various financial service providers to streamline transactions.

3. Target Customers

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• Banks: Offered a trusted compliance framework, tokenization of bank deposits, and the opportunity to continue core business operations

• Consumers: Provided with a simpler and safer way to access digital assets, using the same accounts for both traditional and digital transactions, and ensuring robust data privacy and consumer protections

• Businesses: Offered turnkey standards for secure and compliant blockchain-based applications, with ensured interoperability and strong data privacy and consumer protections

4. Key Points

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• MTN Foundation and Structure

  • Forms a secure network overlay using a group of validated counterparties

  • Operates across multiple public and private blockchains

  • Ensures all transactions comply with regulations and adhere to specific governance rules

• Onboarding Process for Banks and VASPs

  • Must meet stringent, case-based onboarding standards

  • Implementation of robust KYC, KYB processes

  • Continuous screening and monitoring to prevent illicit activities including money laundering and terrorist financing

• Stable and Regulated Payment Tokens

  • Money-like assets to be used as trusted store of value and medium of exchange in the network

  • Includes fully collateralized stablecoins, CBDCs, and tokenized retail bank deposits

• Facilitating Secure Cross-chain Interoperability

  • Addresses issues of fragmented networks and security vulnerabilities

  • Enables secure cross-chain interoperability across blockchains and traditional networks

• Comprehensive Governance Framework

  • Establishing rules to govern interactions between network participants

  • Ensures protection for consumers and businesses, and outlines liability among participants

  • Leverages Mastercard's experience in developing rules for payment networks

• Confidence in Transaction Compliance within MTN

  • Transactions settled on public or private chains can be conducted with confidence in their compliance

  • Transactions settled on underlying chains but all MTN transactions are compliant

  • Provides clarity and predictability in the rules governing transactions

• Shared Set of Commercial Terms and Standards

  • Establishes uniform transaction standards, remedies, and technologies for digital asset payments

  • Allows seamless transactions across various chains in a secure and compliant manner

• Potential Features of the MTN

  • Offers consumer protections including zero-liability guarantees and potential reversals

  • Standardizes terms and conditions for certain programmable smart contracts

  • Clearly delineates the tokens permitted for use as payment on the network

  • Users can utilize digital representations of a portion of their bank deposits in transactions on the MTN

  • These "tokenized deposits" can interact natively with other tokens and be used in programmable smart contracts

• MTN Compatible Wallet

  • Facilitates customer interactions through a wallet compatible with MTN

  • Provided by a bank, VASP, or other licensed entity allowing interaction with crypto assets from various blockchains

• Allocation of Liability and Smart Contracts

  • Rules allocating liability among participants, with some being executed through smart contracts

  • Enables efficient and automated execution of pre-programmed governance mechanisms

5. People

Raj Dhamodharan - Executive Vice President, Blockchain and Digital Assets.

6. Industry Initiatives Participation

7. Resource

Mastercard announces Multi Token Network (MTN) to scale and secure blockchain technologymastercard

Whitepaper - Unlocking the potential of digital asset innovation: Building a Mastercard Multi-Token Network