Mastercard Inc. said on Wednesday it would begin allowing merchants to accept some cryptocurrencies on its network later this year, marking the most recent adoption of digital currencies by a traditional payments player.
“We are here to allow customers, merchants and businesses to move digital value – traditional or cryptographic – however they want,” said Rajcard Dhamodharan, executive vice president of digital assets at Mastercard, in a blog post.
Mastercard MA,
already works with some cryptographic platforms that issue Mastercard cards allowing people to spend their crypto assets, but through these arrangements cryptocurrencies do not flow through the Mastercard network, as cryptographic partners convert digital currencies into traditional currencies and then transmit them to Mastercard . By moving to support some cryptographic assets directly, Mastercard “will eliminate inefficiencies, allowing consumers and merchants to avoid having to make conversions between cryptography and traditional to make purchases,” said Dhamodharan.
Mastercard plans to be selective about which cryptocurrencies it allows while starting its plan. The company will look for cryptocurrencies that respect the privacy of consumer information, follow compliance procedures and “offer the stability that people need in a vehicle to spend, not to invest”.
Traditional financial technology companies are increasingly experimenting with new digital assets. Mastercard, for example, had previously disclosed that it has discussions with central banks about the possibility of “digital central bank currencies”, which would serve as alternative forms of payment in addition to fiat currency.
Mastercard Chief Executive Michael Miebach said of the company’s latest earnings statement that Mastercard’s emphasis on consumer protection and transparency, as well as its acceptance network, can be useful for central banks as they think about the future of money.
Visa Inc. CEO Al Kelly said on the Visa V,
The most recent gains indicate that the company also has agreements with digital platforms and wallets that issue Visa cards so that customers can spend their cryptographic holdings. “These portfolio relationships represent the potential for more than 50 million Visa credentials,” he said.
Kelly also spoke extensively about the prospects for cryptocurrency on the Visa platform. “Needless to say, as a specific digital currency becomes a recognized medium of exchange, there is no reason why we cannot add it to our network, which already supports more than 160 currencies today,” he said.
PayPal Holdings Inc. PYPL,
started allowing U.S. users to buy and sell cryptocurrencies as bitcoin through its platform last year, and the company plans to allow consumers to use their crypto balances as financing instruments when shopping with PayPal merchants as early as this quarter. Square Inc. SQ,
Chief Executive Jack Dorsey is a strong advocate of bitcoin and has begun allowing users of Square’s Cash App to buy and sell this cryptocurrency more than three years ago.