Mastercard Inc. said Wednesday that it would begin allowing merchants to accept some cryptocurrencies on its network later this year, marking the latest embrace of digital coins by a traditional payments player.
“We are here to enable customers, merchants and businesses to move digital value — traditional or crypto — however they want,” Mastercard’s executive vice president for digital assets Raj Dhamodharan said in a blog post.
Mastercard MA, +0.23% already works with some crypto platforms that issue Mastercard cards allowing people to spend their crypto assets, but through those arrangements the cryptocurrencies don’t flow through Mastercard’s network, as the crypto partners convert the digital currencies to traditional currencies and then transmit them to Mastercard. By moving to support some crypto assets directly, Mastercard will “cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional to make purchases,” Dhamodharan said.
Mastercard plans to be selective about which cryptocurrencies it allows as it embarks on its plan. The company will be looking for cryptocurrencies that respect the privacy of consumer information, follow compliance procedures and “offer the stability people need in a vehicle for spending, not investment.”
Traditional financial technology companies are increasingly experimenting with new digital assets. Mastercard, for one, had already disclosed that it’s held discussions with central banks about the possibility of “central bank digital currencies,” which would serve as alternative ways to pay beyond fiat currency.
Mastercard Chief Executive Michael Miebach said on the company’s latest earnings call that Mastercard’s emphasis on consumer protection and transparency, as well as its acceptance network, could prove useful to central banks as they think about this future of money.
Visa Inc. CEO Al Kelly said on Visa’s V, -0.04% most recent earnings call that the company also has arrangements with platforms and digital wallets that issue Visa cards so that customers can spend their crypto holdings. “These wallet relationships represent the potential for more than 50 million Visa credentials,” he said.
Kelly also spoke broadly about the prospects for cryptocurrency on Visa’s platform. “It goes without saying, to the extent a specific digital currency becomes a recognized means of exchange, there’s no reason why we cannot add it to our network, which already supports over 160 currencies today,” he said.
PayPal Holdings Inc. PYPL, -0.36% began letting U.S. users buy and sell cryptocurrencies like bitcoin through its platform late last year, and the company plans to allow consumers to use their crypto balances as funding instruments when they shop with PayPal merchants as soon as this quarter. Square Inc. SQ, -0.24% Chief Executive Jack Dorsey is a big proponent of bitcoin, and he started letting users of Square’s Cash App buy and sell that cryptocurrency more than three years ago.