Mastercard Launches Crypto Secure For Fraud Detection
Mastercard is a global payment technology accepted in more than 200 countries around the world. It is the second largest payment service provider after Visa. As per the latest research, Mastercard holds roughly 35% of the market share in US, while Visa has around 50% of the market share. As you can imagine, just those two alone cover pretty much the entire payment cards industry in US.
Obviously, for companies like Mastercard, decentralization is not really a great thing but they have to embrace it and make changes accordingly. With decentralization, they are the ones who are attacked the most as this would reduce the need for their services hence they won’t be able to collect fees from banks and merchants (keep in mind that banks get charged fees from Mastercard and the end user is the one who pays it most of the time).
Here’s a quick example on how Mastercard makes money (one of the hundreds of fee types). Every time a credit card transaction happens, Mastercard benefits from those transactions (in our example that would be the Card Network Processors and the Payment Processor fees).
With that in mind, Mastercard has to be innovative in their ways to get involved with web3 in anyway they can so they can still collect fees, otherwise if web3 and blockchain becomes technology of the future, they will be obsolete pretty soon.
They are smarter than that. They don’t have $280 billion market cap for no reason. This time, they came up with a new tool called Crypto Secure.
Crypto Secure is a new tool launching from Mastercard which will help detect fraud on crypto merchants and crypto related accounts. This will help banks and merchants to identify those transactions and reject them if necessary as well as cut off transactions coming from prohibited crypto exchanges.
This tool leverages on artificial intelligence (another AI thing just like everything else those days) and blockchain data where all transactions are public records. This tools is being built by CipherTrace, a blockchain startup which was acquired by Mastercard last year.
It is also important to note that blockchain gives a great opportunity for everyone to build any platform or product by relying solely on public data available in blockchain. While previously, companies like Mastercard that have a huge database with data about customer behavior, they kept those secretly to themselves and you had to cooperate with them in order to be able to build anything on top of it (and always got a cut from your business). Now, with blockchain, everything is available for free, so your only limit is your creativity.
It is worth noting that Mastercard offers a variety of tools for AML and fraud detection for FIAT currency based transactions so this is more like an expansion of their existing services by covering crypto transactions as well.
Crypto has been under massive scrutiny from regulators regarding fraud. One example of that is Tornado Cash which was currently sanctioned by OFAC. You can read the entire article on this below.
Web2 companies who sh*t on crypto and blockchain technology do that while trying to figure out ways to get involved. Just because a x company or reliable person from web2 space talks bad about blockchain, it does not necessarily mean that the technology is useless. Mastercard is not new to web3 space and crypto. Although they were not really happy with it initially as this reduces fees they can collect, they are figuring out other ways to collect fees related to crypto. Always one step ahead.
Although my hopes are that hopefully in the next 10 years Mastercard and Visa will be obsolete and everything will be handled through decentralized blockchain payment solutions!