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 payments world.
This is why, the financial services giant, Mastercard is scheduling to give merchants the option to receive payments in cryptocurrency in the not so distant future.
As per a source familiar with the matter, the functionality will see Mastercard customers’ digital currency payments settled in crypto at participating merchants, a first for the financial giant. The company has not yet disclosed which digital currencies it intends to support, or where.
The details shed new light on CEO Michael Miebach’s Q4 pledge to integrate digital currency payments “directly on our network” in a move the new chief, helming his first earnings call on Jan. 28, said will provide maximal flexibility to customers and merchants alike.
Previously, Mastercard supported limited cryptocurrency transactions through its crypto card partners Wirex and Uphold. But those programs only cover the payment, not settlement; the coins converted to fiat currency well before reaching the merchant.
The new initiative promises to upend that dynamic among the store owners and businesses who opt-in. They will be able to conduct their business beyond the bounds of the fiat ecosystem, assuming, of course, their customers have crypto they’re willing to spend.
That’s hardly a safe bet given the buy-and-hold mantra pervading the world’s largest cryptocurrency. The source pointed out, most bitcoin buyers primarily treat their coins as investment vehicles, not payment tools. And the source underscored there’s no guarantee Mastercard’s crypto settlement initiative will support bitcoin.
Instead, crypto will be evaluated against Mastercard’s 2019 “Principles for Blockchain Partnerships” framework, the source said. Released in the wake of Mastercard’s Libra exit, the document placed emphasis on stability, consumer protection, and regulatory compliance in vetting potential partners.
“Many of today’s 2,600 digital currencies today fail to do this,” Mastercard said at the time.
In a blog post published after this story, Mastercard Executive Vice President for Blockchain and Digital Asset Products Raj Dhamodharan hinted stablecoins will be the primary beneficiary of Mastercard’s coming integration.
“Our philosophy on cryptocurrencies is straightforward: It’s about choice. Mastercard isn’t here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants, and businesses to move digital value,” Dhamodharan said.
Mastercard’s announcement comes after Tesla Inc. said it invested $1.5 billion in Bitcoin this week, sending the cryptocurrency to a record.
On the other hand, Visa Inc. has said if a digital currency becomes a recognized means of exchange, there would be no reason why the firm wouldn’t add it to its network, which already supports 160 currencies.