Mastercard Will Allow Cardholders to Transact in Cryptocurrency on its Network

Mastercard Inc, a technology company that connects consumers, financial institutions, merchants, governments, and businesses across the world, enabling them to use electronic forms of payment, will begin allowing cardholders to transact in certain cryptocurrencies on its network, becoming the latest company to embrace digital assets.

Mastercard’s announcement which allows cardholders to transact in cryptocurrency comes after Tesla Inc. said it invested $1.5 billion in Bitcoin this week, sending the cryptocurrency to a record. News of Tesla’s investment in bitcoin sent the digital currency soaring 14% to a record high of $43,500, a 300% increase on this time last year as cryptocurrency investment has moved into the mainstream as global interest rates remain at record lows.

According to a Mastercard blog post on Wednesday, the firm is also “actively engaging” with central banks around the world on their plans to launch new digital currencies.

The company will prioritize consumer protections and compliance in its own plans, Raj Dhamodharan, executive vice president of digital asset and blockchain products and partnerships, said in the post.

Mastercard has already partnered with some of the biggest cryptocurrency firms, including Wirex and BitPay — but the company has historically required digital currencies to be converted into fiat currencies before processing payments for transactions on its network.

“Our change to supporting digital assets directly will allow many more merchants to accept crypto — an ability that’s currently limited by proprietary methods unique to each digital asset,” Dhamodharan said. “This change will also cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional to make purchases.”

For its part, rival Visa Inc. has said if a digital currency becomes a recognized means of exchange, there would be no reason why the firm wouldn’t add it to its network, which already supports 160 currencies.

“Our philosophy on cryptocurrencies is straightforward: It’s about choice,” Dhamodharan said. “Mastercard isn’t here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants and businesses to move digital value.”