Mastercard on crypto: “I can’t run fast enough to get into this space”

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For Mastercard, it’s not enough to just look for a role in cryptocurrency payments. The card network wants to ensure that it is considered an essential partner, especially with regard to the security of these transactions.

As cryptocurrency and newer assets such as non-fungible tokens change payments and the way people invest, more ‘powerful’ intelligence will be needed to ensure that the cryptocurrency economy looks the same. level of trust than traditional payment methods, according to Mastercard.

“A lot of people are rushing to get into crypto quickly and those questions are not being answered,” CEO Michael Miebach said on Thursday morning’s earnings call. “Cryptography is always an exciting topic. There is a lot going on and we have a role to play.”

Mastercard recently completed its deal to acquire CipherTrace, which was announced in September, as part of a series of steps it took this year to build a cryptocurrency business. Among other things, CipherTrace helps customers mitigate cryptocurrency risk.

“Cryptography is always an exciting topic. There’s a lot going on and we have a role to play, ”said Michael Miebach, CEO of Mastercard.

Bloomberg

Cryptocurrency has long suffered from the perception that it is a place of money laundering and other types of fraud, and Miebach said the acquisition of CipherTrace will allow Mastercard to add services that address the cryptocurrency risk and emerging compliance issues as more jurisdictions regulate crypto.

“You should expect authentication to play a role in cryptography,” Miebach said. “CipherTrace promotes compliance for crypto transactions. We can’t run fast enough to get into this space.”

Last week, the card brand also announced a partnership with the Bakkt cryptocurrency wallet to support incentive marketing for cryptocurrency credit and debit cards.

For the quarter ended Sept. 30, Mastercard reported revenue up 30% year-on-year to $ 5 billion and earnings per share rose 37% to $ 2.37. These numbers exceed analysts’ forecasts of $ 4.95 billion and $ 2.19 per share.

Mastercard and Visa are gradually creating products and services that support cryptocurrencies, stablecoins, and other digital assets. In February, Mastercard said it would support cryptocurrency transactions on its network, although its stance is more focused on stablecoins (which attach their value to government-issued money) than on coins. volatile cryptocurrencies such as Bitcoin. More recently, it has made its first foray into non-fungible tokens (NFTs) or digital assets that can represent art or other content.

The card brand has also expressed interest in working with governments considering central bank digital currencies, connecting governments with financial institutions to manage disbursements. “We will prepare our network if and when a government is ready with a digital currency,” Miebach said.

During the earnings call, Miebach said the company’s deal to acquire Danish company Aiia was key to its open banking strategy. Aiia provides an application programming interface connection between more than 2,700 banks in Europe and a payment and fintech customer base. Financial terms of the Aiia deal, announced in September, were not disclosed.

In 2020, Mastercard acquired Finicity, which Mastercard used to expand its open banking platform and expand financial services through real-time access to data, which is part of how banks and fintechs share data. information to establish open banking connections, allowing consumers to use a single application to access financial services from various providers. Mastercard plans to combine Aiia and Finicity technology to promote data sharing and open banking in Europe and North America.

“Aiia will complement our existing open banking assets,” said Miebach. “This will support credit decisions, scoring, improvements in the use of account information and payment applications in all markets.”

Miebach provided an update on Mastercard Payouts, a buy now / pay later product that the card brand launched in late September. Mastercard Installments uses Finicity technology to help pre-qualify borrowers for installment loans. The service was launched with Barclays PLC in the United States, Fifth Third Bancorp, FIS, Galileo, Huntington Bancshares, Marqeta, SoFi and Synchrony in the United States, and with Qantas Loyalty and Latitude in Australia.

Similar to Visa’s BNPL strategy, Mastercard hopes to apply its network to deliver BNPL to large-scale merchants, minimizing the labor required to support installment loans.

“Buying now / paying later is an exciting space,” said Miebach. “We have a solid range of banking partners. The idea is to integrate it into our network, hassle free for merchants and lenders at the point of sale. “

The card brand further reported that domestic spending in the United States improved despite the broader supply chain issues that led the United States to report weaker-than-expected GDP growth for the quarter. most recent. Retail sales in the United States were up 5% from 2020 and 12% from 2019, reflecting both the strength of stores and e-commerce, according to the card brand, which also noted that the outlook for the pandemic had improved with the opening of new travel lanes.

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