Mastercard has become the latest payment company to give cryptocurrencies its blessing. The financial services firm has begun preparations to support select cryptocurrencies later this year, Mastercard’s digital asset and blockchain VP Raj Dhamodharan said in a blog post.
Of course, if you want to be part of the establishment, you have to play by the rules. After seeing a surge in crypto transactions, Mastercard is gearing up to onboard select currencies that meet its criteria around security, reliability and compliance. That effectively means that many virtual currencies may not make the cut at the first hurdle. At the same time, the move will allow many more retailers to accept crypto as a form of payment.
The primary metric that a stablecoin will be judged by is consumer protection, including privacy and strict oversight of consumer information — essentially “the same level of security people have come to expect in their credit cards,” Dhamodharan said.
In addition, cryptocurrencies will need to implement strict compliance measures, including “Know Your Customer,” which put simply is the customer verification process used by the financial services industry. They must also adhere to local laws and regulations in the regions they operate in. Finally, the digital assets must be accepted as a form of payment, instead of functioning as an investment opportunity.
"This is a big change that will require a lot of work. We will be very thoughtful about which assets we support," Dhamodharan adds.
Mastercard’s decision to fully embrace crypto follows in the footsteps of fellow payments firm PayPal — which began allowing US users to buy, sell and hold virtual currencies in November. Tesla also recently purchased $1.5 billion in Bitcoin and said it would soon start accepting it as a payment.
For its part, Mastercard has dabbled in crypto, but has never allowed the currencies to move through its network, instead relying on its partners (including Wirex and BitPay) to convert the digital assets into traditional currencies for spending. It also holds 89 blockchain patents globally, with an additional 285 applications pending.