Mastercard's New Tech Could Change How Banks Handle Money and Securities

Mastercard Inc MA is collaborating with major U.S. banks to test a shared-ledger technology that will enable the unified settlement of tokenized assets, including commercial bank money and Treasury and investment-grade debt securities. 

This Regulated Settlement Network proof-of-concept will simulate dollar transactions, aiming to simplify and speed up international and system-wide transactions while reducing errors and fraud risks, Bloomberg cites a Mastercard statement.

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The new ledger technology can revolutionize financial operations by allowing commercial bank money, wholesale central bank money, and securities like investment-grade debt to reside on a single system once they are tokenized. 

The initiative builds on a 12-week pilot that started in late 2022, focusing on domestic interbank and cross-border dollar transactions.

Major financial institutions participating in this trial include Citigroup Inc C, JPMorgan Chase & Co JPM, US Bancorp, Wells Fargo & Co WFC, and Visa Inc V, along with Swift, TD Bank NA, and Zions Bancorp ZION. 

Experts from the Bank of New York Mellon Corp BK and the International Swaps and Derivatives Association contribute to the project. Earlier in May, Mastercard reported fiscal first-quarter net revenues of $6.35 billion, up 10% year over year, beating the analyst consensus estimate of $6.34 billion. Adjusted EPS of $3.31 beat the analyst consensus estimate of $3.24.

Michael Miebach, CEO of Mastercard said, “We are driving growth in electronic payments by scaling innovative technologies like tokenization.”

Mastercard stock gained 18% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Financial Services ETF IYG and Fidelity MSCI Financials Index ETF FNCL.

Price Action: MA shares are trading lower by 0.04% at $452.87 at the last check Wednesday.

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