Mastercard, the giant multinational financial services institution has partnered with R3, a leading provider of blockchain technology solutions to jointly develop a blockchain cross border payments solution. Their objective is to ease the global cross border payments processing.
Globally, cross border payments is a large industry, and it’s growing significantly. However, this industry faces several challenges, therefore, the partnership between Mastercard and R3 is an important one.
Media reports state that the number of B2B cross border payment transactions will reach 14.8 billion by 2023. This is a significant rise from 13.5 billion transactions in 2019, and it represents a 7% growth.
This industry has its share of challenges though! Reports state that large corporations executing cross border payment transactions face challenges due to the lack of transparency.
It’s different in case of smaller businesses since they find cross-border payment services costly. Smaller businesses also experience a lack of accessible cross border payment services.
Blockchain can bring in the much-needed transformation in this industry with its transparency, immutability, and security. Smart contracts running on blockchain networks can automate contract administration, moreover, the distributed ledger of blockchain makes it easier to share information.
Banks and financial services institutions are increasingly realizing the value of blockchain in cross-border payments. Reports state that increasing penetration of blockchain in this industry will likely contribute to its growth, thanks to higher efficiency.
Mastercard and R3: A valuable partnership
The wide-ranging experience of Mastercard in the financial services industry is well-known. Mastercard will likely bring its considerable expertise to the table in this partnership to build a blockchain cross border payments solution.
R3 is a reputed provider of enterprise blockchain technology solutions, and Corda, the enterprise blockchain framework offered by R3 has gained much prominence already. Corda is quite popular with banks and financial services institutions.
For e.g., Barclays and Royal Bank of Scotland (RBS) are already using R3 Corda in their effort to make the real estate sector more efficient. Mastercard is bullish on the blockchain technology too, as its efforts to patent its blockchain innovations show.
Together, Mastercard and R3 will develop and pilot a new blockchain cross border payment solution. The proposed solution will connect global payment providers, and it will support them by providing a clearing and settlement network. Mastercard will take the lead in operating this proposed network.
There are other notable efforts to harness the power of blockchain to improve the cross border payments processes. For e.g., Visa is already working on a blockchain cross border payments solution focusing on corporate entities.
Are good days ahead for cross border payment transactions?
Blockchain has much to promise so far as cross border payments are concerned, however, concerted efforts are important. The partnership between Mastercard and R3 could just bring that to the table.
