"Your Money, Your Choice" - Mastercard, Bakkt Unveil Plans To Let Partners Integrate Crypto"

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by Tyler Durden
Monday, Oct 25, 2021 - 01:35 PM

After months of working on its plans for crypto integration (jumping on the bandwagon with Visa and PayPal), CNBC reported Monday that Mastercard is planning to announce that any of the millions of merchants and banks who use its payments network will soon be able to integrate crypto into their product offerings.

According to CNBC, this means the company will now allow crypto wallets on its network, and will also allow credit and debit cards to offer reward points in crypto. But that's not all: the new integration will allow digital assets to actually be spent on the network (without needing to be converted to fiat). Loyalty programs run by airlines and hotels can also now be converted into bitcoin.

Mastercard told CNBC it's simply delivering on something its clients have long been asking for.  said its clients have been asking for more help about integrating with crypto and its simply answering the call.

"We want to offer all of our partners the ability to more easily add crypto services to whatever it is they’re doing," Sherri Haymond, Mastercard’s executive vice president of digital partnerships, said in an interview. "Our partners, be they banks, fintechs or merchants can offer their customers the ability to buy, sell and hold cryptocurrency through an integration with the Baktt platform."

Bakkt CEO Gavin Michael said his company was just trying to "lower the barrier to entry" for crypto.

The news sent shares of Bakkt, a crypto wallet and custody firm that went public via SPAC earlier this month, surging more than 50%, after CNBC said Mastercard had decided to partner with the firm, which was recently spun off by ICE, to act as its behind-the-scenes provider of all crypto wallet and custody services.

Shares of Mastercard also surged as traders celebrated the news.

Mastercard first made its intentions regarding crypto known (as we noted) back in February when it announced plans to make crypto more "safe, useful and applicable" by adding them to its network. As the company said in a statement, the trend of American consumers using credit and debit cards to purchase crypto (or even to borrow money and lever up) was "unmistakable."

MC said at the time: "It should be your choice, it’s your money."

Why Mastercard is bringing crypto onto its network

Whatever your opinions on cryptocurrencies - from a dyed-in-wool fanatic to utter skeptic - the fact remains that these digital assets are becoming a more important part of the payments world.

We are seeing this fact play out on the Mastercard network, with people using cards to buy crypto assets, especially during Bitcoin's recent surge in value. We are also seeing users increasingly take advantage of crypto cards to access these assets and convert them to traditional currencies for spending.

To be clear, this data is not of any individuals - it's anonymized and in aggregate - but the trend is unmistakable.

We are preparing right now for the future of crypto and payments, announcing that this year Mastercard will start supporting select cryptocurrencies directly on our network. This is a big change that will require a lot of work. We will be very thoughtful about which assets we support based on our principles for digital currencies, which focus on consumer protections and compliance.

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

Doing this work will create a lot more possibilities for shoppers and merchants, allowing them to transact in an entirely new form of payment. This change may open merchants up to new customers who are already flocking to digital assets and helping sellers build loyalty with existing customers who want this additional option. And customers will be able to save, store and send money in new ways.

We want to help these concepts flourish and reach their potential, while also developing and encouraging the necessary guardrails.

"We are here to enable customers, merchants and businesses to move digital value — traditional or crypto — however they want. It should be your choice, it’s your money."

To be completely clear, not all of today’s cryptocurrencies will be supported on our network. While stablecoins are more regulated and reliable than in the recent past, many of the hundreds of digital assets in circulation still need to tighten their compliance measures, so they won’t meet our requirements. We expect consumers and the ecosystem as a whole will start to rally around the crypto assets that offer reliability and security. It’s those very same stablecoins that we expect to bring into our network.

What are we looking for? Four key items.

  • First and foremost we need consumer protections, including privacy and security of consumers’ information — the same level of security people have come to expect in their credit cards.

  • Next, strict compliance protocols will be needed, including Know Your Customer, a requirement meant to snuff out illegal activity and deception in  payment networks.

  • Also, these digital assets must follow local laws and regulations in the regions they are used.

  • Lastly, people will want to use these digital assets for payments, so that is one of our criteria too. To reach our network, crypto assets will need to offer the stability people need in a vehicle for spending, not investment.

We are already working hard to provide this consumer choice for cryptocurrencies. We teamed up with Wirex and BitPay last year to create crypto cards that allow people to transact using their cryptocurrencies. We added to those partnerships this year by joining forces with LVL, an up-and-coming cryptocurrency exchange. These relationships — with many more planned in the pipeline — build on our many years of crypto collaborations.

In all of these cases, cryptocurrencies still don’t move through our network. Our crypto partners convert the digital assets on their end to traditional currencies, then transmit them through to the Mastercard 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. 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.

Added to this work, Mastercard is actively engaging with several major central banks around the world, as they review plans to launch new digital currencies, dubbed CBDCs, to offer their citizens a new way to pay. Last year, we created a test platform for these banks to use these currencies in a simulated environment. Using our deep experience in payments technologies, we look forward to continuing these partnerships with governments and helping them explore the best ways to develop these new currencies.

The big question now: If you haven't already, is now the time to lever tf up as major credit card companies actually attempt to make crypto usable for payments?