Payment giant Mastercard is set to allow merchants to receive payments in cryptocurrency in an initiative that is set to roll out this year. Mastercard will introduce the crypto feature whereby participating merchants can have more payment options for customers. While the company is yet to reveal the cryptocurrency options it will settle for or the countries where it would operate, this functionality is the first of its kind for the American financial services corporation.
The latest development from Mastercard is a promise kept by the company’s new CEO Michael Miebach who pledged during the company’s fourth-quarter earnings call that Mastercard would incorporate digital currency payments into its network. Miebach noted that this move would ensure the flexibility of its payment services for customers and merchants alike.
Using the resources of its crypto partners, Mastercard had previously supported the use of cryptocurrency on its platform. Only that such transactions were limited, in that only payments were covered, and merchants had to be settled in fiat currencies after conversions.
Now, this means that businesses who join the initiative would move beyond the confines of conventional currency and be able to accept payments in cryptocurrency. However, it remains to be seen how the cryptocurrency payment option would work. Users of crypto have adopted the hold and buy strategy, a widespread practice in the cryptocurrency market. Many crypto users, especially Bitcoin owners, see their coin as a store of value – an investment portfolio that would be useful for future profits.
On the other hand, there’s no guarantee that Mastercard’s cryptocurrency system would support Bitcoin. Mastercard is more likely to assess every cryptocurrency using its Principles for Blockchain Partnership, a framework that the company developed in 2019. The framework in question listed criteria such as stability, consumer protection, and regulatory compliance as the basis for accepting any future crypto partner. In 2019, Mastercard said that almost every cryptocurrency existing then failed to meet these criteria.
As of now, only a low number of retailers accept crypto as a form of payment option. Although Tesla said it was in the process of integrating a crypto payment option in its electric car purchase, it is still within a theoretical framework. As it is, fiat currencies are in charge, and it would be hard for cryptocurrencies to take over.
However, Mastercard believes that sooner rather than later, a cryptocurrency would become a reality. For this reason, the company has been securing its space in the digital era by steadily patenting my innovations in the sector. As at the least count, Mastercard had 89 patents already with more to come.
Using its team of crypto experts, Mastercard has developed a platform that enables central banks around the world to test digital currencies. The company said it was in talks with the central banks to suggest how digital currencies could be integrated into the traditional use serving as an alternative way to make payments asides from fiat currencies.
Observers are surprised at the pace at which Mastercard had gone in trying to support crypto-based transactions in its system. Other competitors such as PayPal and Visa said they would be integrating crypto in their network. While PayPal is set for sometime this year, Visa didn’t give a timeline.