When the blockchain delivered encrypted ledgers a decade ago, the world’s largest financial institutions seemed interested in the technology driving the cryptocurrency bitcoin, but were hardly motivated to build a business around it. Things are different now.

Global giant Mastercard International Inc. represents a prominent example. In the space of the past nine months, the credit and debit card issuer has filed new patents for consumer payment and security technology using the blockchain, and announced an application programming interface for opening up the distributed ledger to banks and merchants.

One patent application released in June showed that Mastercard had developed a retrieval process that can verify a cardholder’s credentials over the blockchain at point-of-sale devices.

“It’s one of those items that, in the beginning was nice, like a hobby,” said Nick Curcuru (pictured), vice president of global big data consulting at Mastercard. “As you started to see some more heavyweights come in and start to use what the technology could provide, we said, ‘there was something here.’”

Curcuru spoke with Peter Burris (@plburris) and Dave Vellante (@dvellante), co-hosts of theCUBE, SiliconANGLE Media’s mobile livestreaming studio, at theCUBE’s studio in Palo Alto, California. They discussed challenges still facing card issuers seeking to use blockchain technology, its potential to transform the supply chain, possible applications for artificial intelligence in the model, user authentication, participation by developers, and collaboration with other firms. (* Disclosure below.)

This week, theCUBE features Nick Curcuru as its Guest of the Week.

Competition among card companies

Among the heavyweights referenced by Curcuru are other major credit card companies. Visa has introduced a pilot phase of its blockchain-powered business-to-business payments initiative, B2B Connect. The project has attracted several global banking firms as partners, including Commerce Bank, Shinhan Bank in South Korea, and Union Bank of the Philippines.

American Express has also built a distributed ledger for participating merchants to use as an incentive for its card rewards program. “We need to always be thinking outside of our core,” Curcuru said. “Can we really allow ourselves and blockchain to grow?”

Although Mastercard has filed a number of new patents, the company is still evaluating the blockchain’s potential to transform transactions between businesses and consumers. A patent awarded to Mastercard in July offers an interesting glimpse into a move by the credit card giant to bridge the government-validated fiat currencies and largely unregulated cryptocurrencies.

Mastercard’s patent essentially creates a hybrid system where blockchain currencies can be used on more traditional payment platforms. The goal is to create a faster transactional channel with less cost.

“The challenges are speed, the transparency of the transaction itself, and actually trying to reduce the cost of those transactions, especially when you talk cross-border,” Curcuru said. “When you’re going from country to country, right now blockchain has a big cost in order to let that happen.”

Supply chain improvement

Mastercard is intrigued with the blockchain’s potential to bring speed and efficiency to the supply chain. Curcuru cited an example where the U.S. military needed a part for a helicopter on a carrier in the middle of the Pacific Ocean. Using the blockchain, military personnel were able to obtain the part securely through the blockchain’s anonymous transaction protocol in less time than usual.

“What blockchain is allowing us to do, almost in real time, is to be able to order goods and services and get them delivered when you need them,” Curcuru said.

Mastercard is reaching out for new technologies that will add intelligence to the payments and supply chain process. In June, Mastercard announced a partnership with artificial intelligence startup G-ILS Transportation Ltd., doing business as Stargo, to spur digital payments within the freight shipping industry and provide a new level of automation.

The partnership followed recent news from the card issuer that it would launch AI Express to help companies develop tailored AI models. “One of the other [blockchain] use cases in the supply chain is auto-ordering,” Curcuru explained. “This thing is learning and understanding what’s coming off the shelves and going on the shelves.”

New ways to authenticate users

The blockchain also offers new opportunities to build models around user authentication. Mastercard has won two patents in the past 90 days specifically designed to improve the authentication process, including a proposal to facilitate anonymous transactions over the blockchain.

In late May, Mastercard was granted patent approval for a process to authenticate coupon use at the point of purchase. Connected payment devices will verify coupon authorization over the blockchain.

The other recent patent, awarded near the end of June, provides a level of transactional anonymity for purchasers. Viewable gifts purchased for significant others or a competitor’s ability to see sales volumes on the open blockchain could be a hindrance to adoption.

“For us, when you start to look at ways to do the authorization or authentication, it becomes a big deal,” Curcuru said. “That’s where we think we can find tremendous value within the blockchain.”

The company also announced this spring that it would hire 175 new technology developers for work on a variety of projects, including the blockchain. Mastercard also opened a developers website to encourage experimentation with APIs.

“We’re out there piloting,” said Curcuru, who is looking for feedback from early adopters. “Is it seamless, is it frictionless? Are we reducing operational time, making it efficient, and reducing costs?”

In addition to its patent filings, Mastercard has also been collaborating with a number of firms. The company recently joined the Enterprise Ethereum Alliance, an initiative that links large corporations with startups in the blockchain and cryptocurrency space. The card issuer is also holding dialogue with some enterprise household names.

“We have conversations with the Googles of the world, the Microsofts, the Dells,” Curcuru said. “It’s a collaboration now.”

Here’s the entire video interview with Curcuru, part of many CUBE Conversations from SiliconANGLE and theCUBE. (* Disclosure: Dell EMC sponsored this segment of theCUBE. Neither Dell EMC nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Photo: SiliconANGLE