Monday, Mar 20, 2023

Mastercard To Let Banks Integrate Cryptocurrencies In Credit, Debit Cards

Mastercard To Let Banks Integrate Cryptocurrencies In Credit, Debit Cards

Banks on Mastercard’s global payment network would be able to give out reward payments on their debit and credit cards through cryptocurrencies.

In a recent announcement, Mastercard said that it will let thousands of banks and merchants on its payment network integrate cryptocurrencies in all their products. For this purpose, it has tied up with Bakkt, a digital asset marketplace. Through this partnership, Mastercard partners will be able to offer cryptocurrency solutions.

Banks which are there on Mastercard’s global payment network would also be able to give out reward payments on their debit and credit cards through cryptocurrencies. There would also be loyalty programs where the rewards may be converted to cryptocurrencies. Even merchants can begin to offer reward points in terms of cryptocurrencies as opposed to traditional redeemable points. Customers will also be able to buy, sell and hold these digital assets through wallets powered by the Bakkt platform.

Like it, or hate it, the cryptocurrency craze has taken the world by storm and India is no exception. India is the second-largest nation in the world on the crypto adoption index by market research firm Chainanalysis. While India has not brought cryptocurrencies under regulation yet, cryptos are legal in India.

How Do You Buy Cryptocurrencies?

To invest in cryptocurrencies, you need to transfer money to your crypto trading account from your bank account. However, recently the country’s biggest lender, the State Bank of India, blocked the receipt of funds by crypto exchanges on its UPI platform, thus making it difficult for investors.

“At present there are three options to deposit funds on WazirX and other crypto exchanges after users complete their KYC verification process,” says Nischal Shetty, founder and CEO, WazirX, a cryptocurrency exchange. He says that Internet banking with the banks that support payments for crypto transactions (IDBI, IDFC First Bank, Federal Bank and Deutsche Bank, among others) is one option.

Payment through platforms such as MobiKwik is another option. One can download the app, add funds and transfer them to the exchange. However, this comes with a monthly limit of Rs 1 lakh, in case of MobiKwik.

Also, P2P (peer-to-peer) transfers is one of the best ways for users to buy or sell crypto with rupee. 

“This is very unfortunate for banks as they are losing out on a big opportunity and a growing market. This will be a big step forward for crypto investors. They will have more options to invest which essentially will be a positive step for the whole ecosystem,” says Bandhul Bansal, founder, Finstreet, a personal finance coaching institute.

Widening Trust

The move by MasterCard can bring about some trust in the crypto transactions landscape in India.

“With this move, investors in cryptocurrencies will have a trustworthy brand and platform which they can leverage to invest in cryptocurrencies. These services will bring millions of new users to the crypto space as well as will act as a gateway for new users for easy fiat onboarding,” he adds. A fiat currency is a currency that is backed by a country’s government like Indian rupees and US dollars.

This is good news for Mastercard as well as they will have new revenue sources as the cryptocurrency market is an ever-expanding one.

Agrees Sharan Nair, chief business officer, CoinSwitch Kuber, a cryptocurrency exchange, "Crypto assets have been gaining significant popularity among Indians over the past six-seven quarters. We believe this will lead to further mainstreaming of excitement on crypto and take us one step closer to making money equal for all.”

“Through this, Mastercard intends to connect with the young demographic who are also crypto investors, empowering their users by offering a dynamic mix of digital asset options enhancing their consumer experiences and stay ahead of the curve as innovators,” says Shetty.

However, it needs to be reiterated that cryptos are not get-rich-quick schemes. “Every investor needs to do their due diligence before investing in crypto and invest based on their risk appetite. (Read the whitepaper, learn from the experts, trade through trusted crypto exchanges in India who comply to follow KYC and AML policies and make it mandatory),” says Shetty.