Mastercard will support cryptocurrency payments later this year
Credit card major Mastercard will begin allowing clients to make payments in certain cryptocurrencies on its network this year, Mastercard has become the latest payment company to give cryptocurrencies. The financial services firm has begun preparations to support select cryptocurrencies later this year, Mastercard’s digital asset and blockchain VP Raj Dhamodharan said in a blog post.
Announcing the move on its blog post on Wednesday, the company stressed that not all the existing cryptocurrencies will be supported on its network. While it did not specify which it is going to support, Mastercard noted that not all digital assets meet the required criteria.
Mastercard called its shift, announced Wednesday, “a big change that will require a lot of work. We will be very thoughtful about which assets we support” The New York-based company said it wanted to increase choices for its customers, who have shown increased interest in cryptocurrency amid Bitcoin’s recent price surge.
Last year, Mastercard partnered with crypto-exchanges Wirex and Bitpay to launch crypto-cards and will be partnering with another exchange, LVL, which will allow people to transact using their crypto-currencies. It also launched a Central Bank Digital Currency (CBDCs) testing platform for central banks to test and develop their digital currencies on top of Mastercard’s blockchain network. Mastercards’ main competitor, Visa Inc. also has entered the crypto-currency race with its own set of crypto-cards and services for digital currencies.
“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,” Mastercard said.
The primary metric that a stablecoin will be judged by is consumer protection, including privacy and strict oversight of consumer information essentially “the same level of security people have come to expect in their credit cards,” Dhamodharan said.
The company made the announcement just days after Tesla revealed it had purchased $1.5 billion in bitcoin and vowed to accept it as a form of payment. Earlier this month, Elon Musk predicted that bitcoin could soon win broad acceptance “by conventional finance people.”
Cryptocurrencies, particularly Bitcoin and Ethereum, started gaining more institutional support last year, triggering another massive rally. Payments companies Square and PayPal have recently backed cryptocurrencies, along with influential hedge fund heads such as Paul Tudor Jones and Stan Druckenmiller.
“Our level of support will vary based on regulations in a given market. We will continue to be guided by published principles on security, compliance and consumer protection and the value to our stakeholders in determining our involvement in a specific initiative. There is certainly a lot going on and significant opportunity ahead,” Dhamodharan said.
During an earnings call last month, Mastercard’s chief executive officer Michael Miebach said that the company will support the development of CBDCs and crypto-currencies by creating rails that can run digital currencies and fiat currencies in parallel.