On February 10th, MasterCard announced that it would allow its cardholders to execute transactions on their platforms through digital currencies, which will be available sometime in 2021. Visa is going through a similar path, revealing a roadmap on February 3rd to integrate the assets into their payment system. Such announcements from two of the main global payment providers present a substantial development in the cryptocurrency market. This article covers MasterCard and Visa adopting crypto; what will be implemented in their networks, how it can be followed by other major companies entering the trend, and their impact on the crypto landscape.
What and how it works
Mastercard has approximately 550 million credit cards in circulation worldwide, while Visa doubles its reach with 1.1 billion. With each company implementing digital currencies into their payment platforms, that leads to an obvious future; a larger network that is available for crypto adopters worldwide, leading to an increase in growth of investors in the market.
MasterCard’s approach to including digital currencies on its platform is still not fully disclosed. Their current goal is to simply provide users with more options to exchange currencies and perform transactions in the preferred manner of their customers. The company also clarifies that most cryptocurrencies will not be available on their platform as they will prioritise stablecoins and fiat-backed digital currencies. The corporation seeks four key elements to ensure an efficient network; consumer protection, strict compliance, local regulations and asset stability. The company is also analysing potential partnerships with Central Bank Digital Currencies (CBDC), announcing a testing-platform for the currencies in late 2020.
On the other hand, Visa has provided an open blueprint of their plans and already accounts for a track record with crypto partnerships such as Coinbase and digital banking/card provider Xapo. The company’s roadmap details the goal of releasing software to aid users in converting and transferring their digital assets through interfaces currently under development by American digital bank First Boulevard. Visa has released a whitepaper conducted by Cornell University on creating an infrastructure that allows offline transactions for CBDCs. It could be a strong indication that they may follow MasterCard’s strategy on prioritising Central Bank Digital Currencies and fiat-backed stablecoins.
Square and PayPal
To have a stronger understanding of where both companies might be leading in the long run, we can look at Square and PayPal’s crypto adoption and how it’s utilised in their networks. Square has offered bitcoin purchases for the past couple of years, which has accounted for roughly 40% of bitcoin entering the American market. The company also made headlines in the last year, after purchasing US$50 million in bitcoin as part of its investment strategy.
PayPal has the widest availability for cryptocurrencies on their platform; users in the US can purchase and exchange bitcoin, ethereum, litecoin and bitcoin cash. The company also stated that it would also allow crypto as payment-methods to merchants around “early 2021,” which could be announced soon.
Given the current services provided by Square and PayPal that focus on cryptocurrencies rather than stablecoins and CBDCs, it’s vital to observe if MasterCard and Visa’s adoption will lead into a broader spectrum of assets that can have a greater impact on the market. Most importantly, if other payment services will follow their lead.
Eyes on Apple and Google
On February 16th, it was announced that BitPay users can now sign their credit or virtual cards to Apple Pay, meaning Apple payments now allow the purchase and transfer of cryptocurrencies through a third-party service. It’s exciting news that puts centralised payment companies closer to the cryptocurrency landscape, but still not a direct service offered by Apple. If Apple and Google Pay implement digital assets into their network, it will present a game-changer for financial services.
One of the leading payment services in the world, Apple Pay accounts for more than 500 million users worldwide with 65 million joining the service in 2020 alone. Suppose Apple Pay adopts their version of a payment system for digital assets; users will have a new tool in their hands that will consequently promote the global awareness of cryptocurrencies.
BitPay’s integration of Apple Pay is good news for crypto, but based on Apple’s Tim Cook’s anti-crypto stance, this potential adoption might take longer than expected. On several occasions, Cook has stated an apprehension for digital assets, saying that “currencies should stay in the hands of countries”. He has also been against Apple launching their digital currency after news that Facebook was developing a digital asset, now named Diem.
Despite those statements made in 2019 under a very different market climate, there is a strong indication that Apple might be allowing crypto into their payment services soon. Apple has already shown great interest in including more financial services in their Pay portfolio. As part of the research/lobbying firm Financial Innovation Now (FIN), Apple has been researching the importance of digital payments for everyday life along with companies like Google, Square and PayPal. With these four companies under the same roof of digital payment research, the chances of Apple following the steps of their crypto-adopting counterparts are quite realistic.
With roughly 150 million users in thirty countries, Google Pay sits alongside Apple, Square, and PayPal to research digital payments through FIN. As with Apple Pay, crypto payments provider BitPay will also offer its services to Google Pay users through their BitPay credit cards. A digital assets service directly from Google Pay’s software, however, has not been announced yet. Google’s recent history with crypto is also a strong indication that cryptocurrencies in its platform may take a while. In 2018, the company made a controversial decision of banning all ads related to cryptocurrencies, which was quickly readjusted in September of the same year by restricting advertisements only to digital wallets, initial coin offerings (ICOs) and trading advice. Google’s CEO Sundar Pichai has no official record of his opinion on digital assets.
MasterCard and Visa’s entrance to cryptocurrency payments is nothing short of great news. With approximately 1.6 billion combined cards, the official release of digital currencies on their platforms will certainly result in a larger adoption of the market through retail investors, while serving as an incentive for more institutional investors and other digital payment providers to join the ecosystem. While companies such as Apple and Google may have a slow rollout into their network, their views may soon change. A year ago, leading companies and institutions in the world had substantially different takes on digital currencies compared to recent developments in the market. Whether or not other companies join in on the trend, MasterCard and Visa will bring in a new realm of investors and consequently, opportunities for every facet of the crypto market.
Zerocap provides digital asset investment and custodial services to forward-thinking investors and institutions globally. Our investment team and Wealth Platform offer frictionless access to digital assets with industry-leading security. To learn more, contact the team at [email protected] or visit our website www.zerocap.com