Global payments giant Mastercard has successfully completed a pilot program for a digital Hong Kong Dollar (e-HKD), showcasing the efficacy of its Multi-Token Network (MTN) solution in settling Web3 transactions involving decentralized applications and digital assets, such as non-fungible tokens (NFTs).
The Pilot Program
The Hong Kong Monetary Authority (HKMA) selected Mastercard to participate in the pilot program, which began in May. Mastercard proposed a use case that demonstrated central bank digital currency (CBDC) interoperability by allowing CBDC holders to create a retail CBDC version for use on any blockchain.
The pilot also highlighted the potential for seamless funding and settlement in Web3 marketplaces through a retail CBDC, such as the e-HKD, in the future.
Mastercard simulated the full lifecycle of the e-HKD within its sandbox environment, including minting, distribution, spending, and redemption. The company also simulated conditionality to ensure the successful delivery of physical items purchased using smart contracts, reducing risk for all involved parties.
Mastercard utilized its Mastercard Crypto Credential to complete the trial. This solution offers common verification standards and infrastructure to enable trusted interactions using blockchain networks. The platform also facilitates interoperability between blockchain networks, offering capabilities across all supported payment tokens and networks.
The pilot showcased the ability to use digital currencies across multiple platforms and explored the safe and secure purchase of a physical luxury item with an associated NFT from an unknown party.
Mastercard plans to deploy the MTN as a testbed for developing live pilot applications with financial institutions, fintechs, and central banks globally. The company looks forward to collaborating with central banks, commercial banks, and tech firms to assess CBDC tech designs, validate use cases, and evaluate interoperability.
The inaugural partners for Mastercard’s CBDC Partner Program include Ripple, Consensys, Fluency, Idemia, Consult Hyperion, Giesecke+Devrient, and Fireblocks. These partnerships will drive innovation and efficiencies within the central banking community and the CBDC value chain as the space continues to evolve.
The successful pilot program conducted by Mastercard demonstrates the potential for digital currencies and CBDCs to be seamlessly integrated into various platforms and payment systems. With the completion of the e-HKD pilot, Mastercard aims to continue supporting central banks in exploring CBDC integration with existing payment methods, ultimately making transactions easier for consumers and businesses in the Web3 economy.