MasterCard (NYSE: MA) has a strange love and hate relationship with blockchain and cryptocurrency.

The company has filed a patent application for a blockchain-based merchant payment processing system and it is participating in the Ethereum Enterprise Alliance. Yet, its CEO Ajay Banga said “Non-government mandated currency is junk” in an October newspaper interview.

U.S. Patent Application 20170323294 for “a method for processing a guaranteed electronic transaction” specifically mentions the blockhain. Here is how it is described in the application:

“The present disclosure relates to the use of recorded guarantees for payment transactions for verification by acquiring institutions to facilitate instantaneous payment to a merchant involved in the payment transaction, specifically the use of a blockchain or other third party network for verification of a guarantee associated with the payment transaction.”

MasterCard is trying to build an Instant Payment Solution on Blockchain

The applicant for the application; dated May 6, 2016, was MasterCard International Incorporated of Purchase, New York. Get the picture folks, MasterCard is trying to create blockchain-based solutions for instantaneous payment.

That would reduce a lot of risks in the current payment system. An obvious advantage of this is that a small merchant can instantly check an account to see if the money is there. That would allow many more businesses to accept credit cards for smaller transactions.

The risk of returned payments might be eliminated, and merchants would be able to serve more customers. More importantly, the fees for transactions can be greatly lowered which would reduce costs and facilitate more use. Very small merchants such as hot dog vendors, food-truck operators, and estate-sale companies would be able to take credit, debit card, and digital wallet payment for all transactions.

This system sounds a great deal like the Lightning Network for Bitcoin and the Raiden Network for Ethereum. The difference is that those solutions use cryptocurrency to facilitate payment, MasterCard plans to use fiat currencies and credit card, gift card, and bank balances.

Banga has said publicly that his company will not accept cryptocurrency until governments issue or approve it. That’s a pretty sensible and shrewd position to take, because governments certainly have the power to shut MasterCard down if it tries to compete with their payment systems. Cooperating will allow the company to expand its business, make more money, and avoid legal and political complications.

An added benefit is that MasterCard can develop a blockchain-based payment solution it can market to governments. Uses government can put such a system to include tax collection and distribution of benefits like Social Security (America’s basic income plan for Senior Citizens and the disabled which serves 66 million people), welfare, veteran’s pensions, and basic income.

Is MasterCard a Growth Investment?

It is obvious that MasterCard’s management has an excellent grasp of the possibilities of next-generation payment technologies and political realities but is it a value investment. After all, this stock was expensive at $149.02 (€126.38) a share on 17 November 2017.

MasterCard is making a lot of money; it reported a net income of $4.621 billion (€3.92 billion) on revenues of $11.94 billion (€10.13 billion) on September 30, 2017. That demonstrates a business model that is already very lucrative without the blockchain.

Further proof of this contention is provided by the rate at which MasterCard’s income is growing. It reported an income of $4.016 billion (€3.41 billion) in September 2016 that rose to $4.612 billion (€3.91 billion) a year later.

Revenues are also growing impressively; MasterCard reported revenues of $10.54 billion (€8.94 billion) in September 2016 that grew to $11.94 billion (€10.13 billion) a year later. That means the company added around $1.1 billion (€930 million) in revenues over the course of 12 months. This shows that MasterCard is definitely a growth investment, but is it a value investment?

Is MasterCard a Value Investment?

Smart value investors will ask how much of that money is MasterCard keeping, and how much cash is it generating? The answer to both questions is a lot.

MasterCard reported a free cash flow of $1.622 billion (€1.38 billion) on 30 September 2017. That was up from $1.325 billion (€1.12 billion) in September 2016.

More importantly, it had $7.423 billion (€6.30 billion) in cash and short-term investments on 30 September 2017. That amount was up slightly from $6.979 billion (€5.92 billion) in September 2016, which proves MasterCard’s business model generates a lot of float.

The company is also running a lot of cash through its till; which shows why there is so much interest in blockchain there. MasterCard reported $4.735 billion (€4.02) in cash from operations on 30 September 2017, that figure was up from $4.582 billion (€3.89 billion) a year earlier, according to ycharts.

The cash gave MasterCard a lot of value including $20.91 billion (€17.73 billion) in assets on 30 September 2017. There was also a market cap of $157.76 billion (€133.79 billion) and an enterprise value of $155.76 billion (€132.10 billion) on 17 November 2017.

MasterCard is Overvalued but it Makes Money

These numbers prove MasterCard is overvalued, but it is making money and adding value. It has just enough value characteristics to eliminate risks and make it safe enough for the widows and orphans classification.

That means you will make money from it even if you pay too much for the stock. There was a dividend of 22¢ (€0.19) a share paid on October 5, 2017. That is small but is up from 19¢ (€0.16) in October 2016.

Such small dividends can be good, because they indicate the company is saving its money, and more importantly investing funds in infrastructure and expansion. That is certainly the case at MasterCard, which provides another value characteristic.

More importantly, MasterCard owners received a 77.59% return on equity on September 30, 2017, which is great. They made money which is the point of owning a stock in the first place.

MasterCard is a very good stock to own, with or without the blockchain. If you are looking for a company with the potential to tap the cryptocurrency bonanza, MasterCard might be it. More importantly, MasterCard is a good company that’s making money right now.

A slightly different version of this article previously appeared at Market Mad House.