Mastercard will allow people to send and receive payments in cryptocurrency later this year after opening up its network to support blockchain transactions.
The announcement marks a significant step towards mainstream acceptance of cryptocurrencies, which Mastercard described as an “important part of the payments world”.
“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,” Raj Dhamodharan, Mstercard’s head of digital asset and blockchain products, wrote in a blog post on Wednesday.
“This is a big change that will require a lot of work. We will be thoughtful about which assets we support based on our principles for digital currencies, which focus on consumer protections and compliance.”
Mastercard is yet to announce which cryptocurrencies will be supported, or when the change will take place, though it will favour “crypto assets that offer reliability and security”.
Bitcoin is the only cryptocurrency to receive a specific mention in Mr Dhamodharan’s post, however only in the context of its surging price drawing interest towards the space.
Its meteoric rise in recent months has seen its market cap overtake both Mastercard and Visa, and is now worth more than both payments giants combined.
But this extreme volatility makes bitcoin largely unpractical as a day-to-day currency at present, with investors increasingly viewing it as a form of “digital gold” that is best suited as a store of value rather than a medium of exchange.
This could see Mastercard focus on so-called stablecoins, which are pegged to the value of traditional currencies or exchange-traded commodities.
“To reach our network, crypto assets will need to offer the stability people need in a vehicle for spending, not investment,” Mr Dhamodharan wrote.
Mastercard has previously partnered with crypto firms Wirex and BitPay in order to allow people to use their cryptocurrency holdings for transactions, though this will be the first time that cryptocurrencies will actually move through the company’s platform, rather than have a third party firm convert the digital assets at each end of the transaction.
Cryptocurrency analysts described Mastercard’s announcement as a “major milestone” for the industry, and forms part of a wider trend of traditional finance being disrupted by this emerging asset class.
“Mastercard is the operator of the second-largest network of credit cards in the world, and for a business of that size to be making this decision shows the long-term trend for crypto asset adoption,” Simon Peters, an analyst at the online investment platform eToro, told The Independent.
“Bitcoin and its peers are, quite simply, going to be part of the mainstream financial universe sooner rather than later.”