Mastercard (NYSE:MA) operates a global payment network supporting 3 billion branded cards, generating $9.8 trillion in transaction value from 150 million merchants annually. It is the second-largest US payment network after Visa, followed by competitors like American Express and Discover. Mastercard is integrating cryptocurrency and stablecoin payments, with plans to support Bitcoin and other digital assets, reflecting its adaptation to new payment technologies. Along those lines, last week Mastercard announced: “Latest partnerships with OKX and Nuvei will unlock a 360-degree approach where consumers can spend stablecoins and merchants can receive them, creating a seamless ecosystem.”
The currency.
- Mastercard has stated it will support Circle Internet Financials’ stable coins known as USDC and EURDC. The company’s flagship product, the United States Digital Coin (USDC) is the second most used stable coin globally. The USDC is 100% backed, 1:1, by cash in US dollars and short-term government securities. Those funds are held at name brand and regulated financial institutions like Blackrock and Mellon. The company’s more recently launched Euro Digital Coin (EURDC) works on the same principle. Circle generates transaction revenues from redeeming USDC and interest income from customer deposited currency reserves backing each USDC stable coin.
- The USDC is regulated and transparent, the face value of an USDC token is always known as is the ability to convert into US dollars through the company or a crypto exchange, including into any fiat currency 24/7/365.
- In our opinion, Circle answers the call for industrial strength, global, and legitimate next generation payments platform for businesses and consumers.
- There are many benefits to using USDC, including: fast (almost immediate) and low-cost transaction processing anywhere in the world. Cross border remittance is a natural market which is traditionally expensive for consumers on a dollar value sent basis and slow settlement for international business-to-business transactions (may require several days). The combined service revenue opportunity is over $100 billion.
The strategy.
Mastercard has established connections to a global network of merchants, and access to all those on-site point of sale devices is critical for mass consumer adoption of stablecoins. The US has been slow to embrace crypto payments particularly by consumers because, in part, there was no convenient, universal way to penetrate the retailers. Now there is.
Partnerships with crypto-native companies such as MetaMask, Kraken, Gemini, Bybit, Crypto.com, Binance, Monavate, and Bleap enable consumers to access the crypto ecosystem. These collaborations allow users to earn rewards, make payments, and spend stablecoins in their crypto wallets using traditional cards through Mastercard’s global network, as well as withdraw stablecoins into their bank accounts via Mastercard Move.
- A crypto wallet is a software program or physical device that stores, manages, and interacts with cryptocurrencies like Bitcoin, Ethereum, or stablecoins. It securely holds private keys (secret codes proving ownership and authorizing transactions) and public keys (addresses used for receiving funds). Crypto wallets facilitate users in sending, receiving, storing, and tracking digital assets on a blockchain.
Stablecoins can simplify settlement processes across global markets and currencies. The Mastercard Multi-Token Network (MTN) supports real-time payments and redemptions, enabling partners such as Ondo Finance to utilize on-chain tokenized assets. JPMorgan Chase and Standard Chartered are currently connected to MTN, linking deposit accounts to innovative digital asset applications.
The pieces for mass consumer adoption of a new payment medium are coming together. JP Morgan and Standard Charter are participating, with others expected to follow. In the four-party domestic retail point-of-sale transaction system, all parties (retailer, merchant processor, card issuer, and consumer) need incentives to participate. Lower transaction fees benefit retailers, but consumers may care more if rewards are tied to crypto transactions, posing a threat to card issuers who profit from interchange fees. Stablecoins could introduce lower-risk funding models. With MasterCard’s involvement, this alternative payment method could become a reality.
