How Do Cryptocurrency Refunds Work?

bitcoin

The rise of cryptocurrencies like Bitcoin is exploding, with more people than ever investing in this virtual currency and others like it. But an often ignored topic of discussion includes cryptocurrency refunds, or the process of returning virtual funds when an online purchase is made. MasterCard recently filed a patent application about this issue, which shone a necessary spotlight on these types of transactions. What does their patent mean for payment processing and how will it affect small business owners like you?

MasterCard’s Cryptocurrency Refunds Patent

With a title like “Information Transaction Infrastructure,” chances are you wouldn’t immediately connect this patent to cryptocurrency refunds. But thanks to astute analysts and researchers who keep a close eye on cryptocurrency news, we know a little more about MasterCard’s virtual payment plans.

The patent, which has an ex-senior analyst at MasterCard listed as its sole inventor, details an infrastructure which would allow users to verify their identities. Through this infrastructure, users could opt in to linking their identity to specific cryptocurrency addresses, which could be useful when users submit payments to merchants from cryptocurrency exchange accounts.

Holding on to a user’s identity could facilitate refunds, since exchanges hold funds from many different users. So if a merchant needs to send back funds for any reason, having an established link would make it easier to verify all the transaction details.

MasterCard’s patent shows they believe users should have two cryptocurrency wallets – one public, and one private. By having one public wallet, it will be possible to conduct verified transactions and receive a refund.

Are There Other Ways to Handle Cryptocurrency Refunds?

Since Bitcoin has been actively used for years now, it’s no surprise that this isn’t the first work done in regard to refunds. Services like Bitrated have built reputation and arbitration platforms for cryptocurrency. A key difference between many of these services is a focus on letting cryptocurrency users build credibility as good consumers without needing to link their actual identity.

It will take time to see if MasterCard’s idea turns into a viable system. But regardless of the outcome, it’s clear that MasterCard is interested in cryptocurrency. Over the last few years, the company has filed several patents and led projects related to this technology, like releasing blockchain APIs.

As cryptocurrency developments continue, you can count on us to cover them and how they may affect your business. In the meantime, ensure you’re paying the lowest processing rates and getting access to all the latest tools – check out our list of recommended credit card processors and start saving big on your payment processing.

 

 

Posted on Tuesday, September 5th, 2017