The biggest payments card provider, Mastercard is in plan to give merchants the option to receive payments in cryptocurrency later this year.
As per the source familiar with this 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 is going to support, or where.
The details throwed 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 January 28, said they will provide maximal flexibility to customers and merchants on the same basis.
Recently, Mastercard supported limited cryptocurrency transactions via its cryptocard partners Wirex and Uphold. But those programs only covered payments, not settlement; the coins were converted to fiat currency well before reaching the merchant side.
The new initiative promises to upend that dynamic from the store owners to 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 cryptocurrencies and they are willing to spend it.
That’s hardly a safe bet given the buy-and-hold mantra pervading the world’s largest cryptocurrency. The source pointed out most btc buyers primarily treat their coins as investment assets, rather not as a payment tool. And the source underscored there’s no guarantee Mastercard’s crypto settlement initiative will support bitcoin.
Instead, cryptocurrency will be evaluated against Mastercard’s 2019 “Principles for Blockchain Partnerships” framework, the source said. Previously released in the wake of Mastercard’s Libra exit, the document placed emphasis on stability, customer protection and regulatory compliance in vetting potential business partners.
“Many of today’s 2,600 digital currencies fail to do this,” Mastercard said at the time.
Relatively few merchants currently accept crypto, bitcoin or no. In recent time, Tesla has plans to sell cars for bitcoin and that remains a hypothetical. A widespread crypto economy is far from reality yet.
But Mastercard has been laying the groundwork for that future through years of patents around the digital currency industry. The company holds 89 blockchain patents and is waiting for approval on an additional 285 pending patents around the world.
In the U.S. those filings include: methods to keep crypto transactions private, on-chain credit card payments verification, instant blockchain payment processing and how to handle crypto refunds, among others.
Mastercard first filed a patent for handling bitcoin payments in 2013 but abandoned that effort in late 2015. They began hiring a team of crypto wallet developers and crypto veterans in 2019. The company is now hosting a platform on which the central banks can test digital currencies.
The payments space is rushing to support blockchain-based currencies at a pace not seen since Bitcoin pioneered the concept of stateless, peer-to-peer immutable transactions in 2009. PayPal intends to roll out bitcoin payment functionality later this year. Visa’s CEO said the rival company may add crypto payments in the future.