Is Mastercard’s Crypto Partnership Good News for Customers?
Mastercard, the international payment giant, recently announced a partnership with a cryptocurrency asset platform Bakkt. Following the collaboration of the two parties, all merchants on the Mastercard network will be able to accept cryptocurrency payments. This means that investors will have more opportunities to use cryptocurrency. Most importantly, Mastercard customers will be able to begin purchasing, selling, and storing cryptocurrency. BigONE believes that allowing customers to purchase cryptocurrency through its network will help the cryptocurrency industry as a whole. Many more cryptocurrency credit and debit cards are likely to be introduced in the future.
Breaking the barriers of crypto-asset trading
Mastercard’s collaboration with the crypto platform is a significant win for the fintech industry. This enables Mastercard network merchants and banks to use digital asset services in tandem to quickly purchase crypto assets. In addition to accepting cryptocurrency payments, Mastercard has introduced cryptocurrency into its customer loyalty program. Mastercard’s partners will offer cryptocurrency rewards, and their customers will be able to use them instead of cash.
According to Mastercard survey data, up to 77% of young customers expressed an interest in learning more about cryptocurrency. And if they learn more about cryptocurrency, 75% of them will choose to use it. The goal of these new crypto products may be to attract some young customers. Furthermore, as brands and merchants strive to attract more young customers, the introduction of these new products represents a once-in-a-lifetime opportunity to meet the market’s growing demand for encryption, payment, and reward flexibility.
Mastercard’s partnership with Bakkt, could significantly expand its access to and adoption of cryptocurrencies; the company confirmed that presently there are more than 2.8 billion active Mastercards with more than 22,000 banks and financial institutions on its network. Mastercard says it will also integrate crypto into its loyalty solutions, enabling its partners to offer cryptocurrency as rewards and create fungibility between loyalty points and other digital assets. “This means that consumers can earn and spend rewards in cryptocurrency instead of traditional loyalty points and seamlessly convert their crypto holdings to pay for purchases. This is the latest move by Mastercard to bring innovative loyalty options to consumers that align with their passion points,” Mastercard confirmed in a statement.
“Mastercard is committed to offering a wide range of payment solutions that deliver more choice, value and impact every day,” said Sherri Haymond, executive vice president, Digital Partnerships at Mastercard. “Together with Bakkt and grounded by our principled approach to innovation, we’ll not only empower our partners to offer a dynamic mix of digital assets options, but also deliver differentiated and relevant consumer experiences.”
Would you consider cryptocurrency for payment?
Using crypto payment will become increasingly simple, whether through a debit card, credit card, or third-party application. It is unsurprising that crypto payments are becoming more popular as the value of cryptocurrencies rises. However, if you want to use cryptocurrency as a payment method, you must also take the following factors into account.
⦁ Tax implications
The Internal Revenue Service of the United States does not recognize cryptocurrencies as a currency, so any profits made by investors from crypto assets are subject to capital gains tax. As an investor, you must therefore keep track of every transaction and pay capital gains tax on all profits.
For example, an investor may have purchased $50 worth of BTC a year ago, and with these BTC the investor may have purchased other cryptocurrencies worth $250 a year later. If the transaction is successful, the investor must pay a capital gains tax of $200. This type of record-keeping may be especially difficult if investors want to trade a large number of crypto assets.
⦁ Volatility
Cryptocurrency is a risky investment. Its value will rise or fall in response to the market’s fluctuations. Because of the volatile price, it is difficult for investors to use it as a payment method. Assume an investor uses Bitcoin to purchase a $50 commodity on Monday. On Monday, the price was around 0.00087 BTC, according to CoinMarketCap data. However, the same Bitcoin is maybe worth say $57 on Friday, a 14% increase from Monday. This is what volatility means when using Bitcoin for payment. As a result, many people regard Bitcoin as a form of investment or a store of value, rather than a means of payment. However, after a somewhat difficult start as legal currency in El Salvador its continued use for payments shows this issue is not cut and dried.
⦁ Consumer protection
According to available data, cryptocurrency payments are currently extremely popular in the travel industry. One of the reasons is that using cryptocurrency payments can help you avoid taxes and reap the benefits of low exchange rates. Many travel agencies now allow travellers to book flights and hotels using cryptocurrency. The most popular companies in the tourism sector who already accepted Bitcoin and blockchain technology are Marriott, Singapore Airlines, TUI, Travelport, AXA, and Webjet.
It should be noted, however, that when users use travel reward credit cards to book flights, they typically receive benefits such as travel insurance and bonus reward points. This means that the consumer protection mechanism provided to users when using cryptocurrency may differ from that provided when using fiat currency.
Mastercard is likely to include some solutions in its new cryptocurrency products. For example, its crypto credit card may offer travel insurance. Mastercard may also assist customers in tracking their cryptocurrency spending for tax purposes. However, in the current situation, BigONE believes that cryptocurrency users should be aware of some potential pitfalls of using crypto for payment purposes, as well as the benefits.
