🗣 Twenty-four crypto cards, including Gemini, Uphold, CoinJar and BitPay, have been launched by Mastercard, letting customers spend their digital assets at 80 million vendors around the world. In October, the credit card giant partnered with Bakkt, a subsidiary of Intercontinental Exchange (owner of the New York Stock Exchange), which will provide technology to allow even more Mastercard issuers the ability to accommodate cryptocurrency transactions.
Mastercard also runs a blockchain incubator called “Start Path,” which has so far assisted 12 crypto startups, giving them direct access to the multinational company’s products, customers, workshops, and mentoring.
Whatever your opinions on cryptocurrencies — from a dyed-in-wool fanatic to utter skeptic — the fact remains that these digital assets are becoming a more important part of the payment’s world.
We are seeing this fact play out on the Mastercard network, with people using cards to buy crypto assets, especially during Bitcoin’s recent surge in value. We are also seeing users increasingly take advantage of crypto cards to access these assets and convert them to traditional currencies for spending.
🗣 Preparing right now for the future of crypto and payments, Mastercard supports select cryptocurrencies directly on their network but is very thoughtful about which assets they support based on principles for digital currencies, which focus on consumer protections and compliance.
Their philosophy on cryptocurrencies is straightforward: It’s about choice. Mastercard isn’t recommending you start using cryptocurrencies. But they are enabling customers, merchants, and businesses to move digital value – traditional or crypto – however, they want.
This creates a lot more possibilities for shoppers and merchants, allowing them to transact in an entirely new form of payment. This change may open merchants up to new customers who are already flocking to digital assets, and help sellers build loyalty with existing customers who want this additional option. And customers will be able to save, store and send money in new ways.
The idea is to help these concepts flourish and reach their potential, while also developing and encouraging the necessary guardrails.
Your money, your choice
🗣 “We are here to enable customers, merchants, and businesses to move digital value — traditional or crypto — however, they want. It should be your choice, it’s your money”, said an official communication.
Not all of today’s cryptocurrencies will be supported on Mastercard’s network. While stablecoins are more regulated and reliable than in the recent past, many of the hundreds of digital assets in circulation still need to tighten their compliance measures, so they won’t meet the requirements. Consumers and the ecosystem as a whole are expected to rally around the crypto assets that offer reliability and security.
What are they looking for? Four key items.
👉 First and foremost, consumer protections, including privacy and security of consumers’ information — the same level of security people have come to expect in their credit cards.
👉 Next, strict compliance protocols will be needed, including Know Your Customer, a requirement meant to snuff out illegal activity and deception in payment networks.
👉 Also, digital assets must follow local laws and regulations in the regions they are used.
👉 Lastly, people will want to use these digital assets for payments, so that is one criterion too. To reach the network, crypto assets will need to offer the stability people need in a vehicle for spending, not investment.
Long term strategy
🗣 Mastercard teamed up with Wirex and BitPay last year to create crypto cards that allow people to transact using their cryptocurrencies and added to those partnerships this year by joining forces with LVL, an up-and-coming cryptocurrency exchange. These relationships — with many more planned in the pipeline — build on many years of crypto collaborations.
In all of these cases, cryptocurrencies still don’t move through our network. Our crypto partners convert the digital assets on their end to traditional currencies, then transmit them through to the Mastercard network. Our change to supporting digital assets directly will allow many more merchants to accept crypto — an ability that’s currently limited by proprietary methods unique to each digital asset. This change will also cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional to make purchases.
Global initiative: new currencies
🗣 Added to this work, Mastercard is actively engaging with several major central banks around the world, as they review plans to launch new digital currencies, dubbed CBDCs, to offer their citizens a new way to pay. Last year, they created a test platform for these banks to use these currencies in a simulated environment. Using deep experience in payments technologies, they look forward to continuing these partnerships with governments and helping them explore the best ways to develop these new currencies.
With 89 blockchain patents granted globally with an additional 285 blockchain applications pending worldwide, Mastercard already has one of the payments industry’s biggest blockchain patent portfolios to draw from to make these projects successful.
“We are inspired by so much of the work going on in the payment world — in banking, in emergent fintech, in crypto — to push forward change. And we are doing as much as we can to set the stage for these players to take the next step forward” they stated.
👀 Have you used any of these digital currencies? Let us know in the comments! 👇