Bitcoin cryptocurrency
Image: PIRO4DMastercard has revealed preparations are underway for the “future of crypto and payments”, hoping to start supporting select cryptocurrencies directly on its network later this year.
“This is a big change that will require a lot of work. We will be very thoughtful about which assets we support based on our principles for digital currencies, which focus on consumer protections and compliance,” a blog post penned by Mastercard’s digital asset and blockchain VP Raj Dhamodharan says.
“Whatever your opinions on cryptocurrencies — from a dyed-in-wool fanatic to utter sceptic — the fact remains that these digital assets are becoming a more important part of the payments world.”
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Dhamodharan said Mastercard is seeing cardholders buy crypto assets and that it’s also seeing use of crypto cards to access these assets and convert them to traditional currencies for spending across its network.
“Our philosophy on cryptocurrencies is straightforward: It’s about choice,” he said. “Mastercard isn’t here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants, and businesses to move digital value.”
The company believes progressing work on crypto on its network will create a lot more possibilities for shoppers and merchants. But not all cryptocurrencies will be supported, as many of the digital assets in circulation still need to tighten their compliance measures before they can meet Mastercard’s requirements.
“We expect consumers and the ecosystem as a whole will start to rally around the crypto assets that offer reliability and security. It’s those very same stablecoins that we expect to bring into our network,” Dhamodharan said.
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“We are already working hard to provide this consumer choice for cryptocurrencies.”
Before cryptocurrency can become transacted on the Mastercard network, the company will need to determine consumer protections, including privacy and security of consumers’ information; strict compliance protocols, including Know Your Customer, to snuff out illegal activity and deception in payment networks; the digital assets must follow local laws and regulations in the regions they are used; and ensure the stability of the cryptocurrency, to some degree.
Mastercard last year teamed up with Wirex and BitPay to create crypto cards that allow people to transact using their cryptocurrencies; it then joined forces with cryptocurrency exchange LVL to do much of the same.
In these instances, however, cryptocurrencies don’t move through the Mastercard network, rather its partners convert the digital assets 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,” Dhamodharan explained. “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.”
In addition to forging further crypto exchange partnerships, Mastercard is also working with several major central banks around the world as they respectively review plans to launch new digital currencies.
Mastercard boasts 89 blockchain patents, with an additional 285 blockchain applications pending.
