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Who says payment cards have to be backed by fiat money? Well, they are if that money is backing stablecoins. Mastercard last month said it is looking to enable acceptance of stablecoin-backed cards at the more than 150 million merchants worldwide that accept its brand.
To pull this off, Mastercard is working with MoonPay, a New York City-based digital-wallet provider with links to more than 500 digital-currency exchanges and wallets. Through these integrations, MoonPay reaches more than 100 million active users of cryptocurrency, according to Mastercard.
First, a little background. Stablecoins are digital currency whose value is pegged to a constant value reflected by a fiat currency, such as the dollar. Some 20 million digital wallets around the world are generating stablecoin transactions each month, while 120 million hold stablecoin balances, say Mastercard and MoonPay.
In this deal, MoonPay will rely on Iron, a developer of APIs for stablecoin transactions. MoonPay reportedly paid a cool $100 million to acquire the company in March. Iron’s technology could ease cross-border payments as well as payouts to contractors and gig workers.
Mastercard is counting on the MoonPay partnership to exploit the steady value of stablecoins and accelerate a movement into digital currency that it began years ago. This is a big ambition. “We are redefining how money moves globally and driving a shift in payments as we know it,” Mastercard executive Scott Abrahams said in a statement when the collaboration was announced.
No surprise that stablecoins have attracted more interest in the broader payments industry than have cryptocurrencies not linked to the steady value of fiat money. “I’ve been seeing a growing excitement around stablecoins in the U.S.,” Aaron McPherson, principal at the advisory firm AFM Consulting, told us.
So Mastercard is just trying not to be left behind. After all, Visa is quietly working the crypto beat as well.
But experts argue stablecoins may not have broad utility in markets like the U.S., where alternatives are readily available. “It’s questionable what problem [Mastercard and MoonPay] are solving,” McPherson told us. “I don’t think there’s going to be a lot of demand for it.”
Clcarly, though, work toward getting crypto transactions running on major network rails isn’t slowing down. Last month, two companies announced they will work together to enable cryptocurrency on existing banking networks as well as on Visa and Mastercard.
That’s a partnership between BlocPal, a banking-technology platform, and Mobilium, a provider of compliance software and other payments technology. The companies hope to allow BlocPal to support transactions on what they call “global banking rails,” as well as the Visa and Mastercard networks.
This is getting interesting. Stay tuned for further developments.
—John Stewart, Editor john@digitaltransactions.net
