Billions of people use cryptocurrency, but it remains inaccessible for most. Unless you are a sophisticated investor with knowledge of how to buy and store digital assets safely, buying and selling cryptocurrency is challenging. A company like Mastercard could help banks solve this problem by making it easy for their customers to buy, sell, send, and receive cryptocurrency. A recent article in the Wall Street Journal reported that several banks are teaming up with payment providers like Mastercard to facilitate the trading of cryptocurrencies. If you’re interested in investing in cryptocurrency but don’t know where to begin, this article has everything you need to know about Mastercard’s partnership with banks and what it means for your investment opportunities.
What Is Mastercard’s Partnership With Banks?
Mastercard recently announced a partnership with a group of banks to facilitate the trading of cryptocurrencies via credit and debit card transactions. Banks that are part of the initiative include Banco Santander, Bank of Tokyo-Mitsubishi UFJ, Canadian Imperial Bank of Commerce, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Royal Bank of Canada, South African Banks, and Standard Chartered. These banks will help facilitate cryptocurrency purchases by allowing customers to link their credit or debit cards to cryptocurrency exchanges. The funds available on these linked cards will be used to purchase cryptocurrencies, just like funds in a person’s bank account are used to make purchases with a credit card. This can be a big deal because it will make it easier for people to buy cryptocurrency.
Why Is This a Big Deal?
There are a few reasons why this is a big deal. First, it will offer people who currently don’t own cryptocurrency an easy way to get involved in the market. Crypto can be intimidating, especially for newcomers. Buying cryptocurrency with a credit or debit card is much simpler than understanding how to store it in a digital wallet or how to set up an account on an exchange. Interchange fees are also a big deal. Credit card transactions are governed by an Interchange fee, which is essentially a transaction fee charged by the credit card provider as payment for the service of connecting the merchant’s bank account with the customer’s bank account. Mastercard is one of the largest credit card providers in the world, so this new partnership could result in lower transaction fees for banks, which in turn will lead to lower transaction fees for customers who use their credit or debit card to buy crypto.
What Does this Mean for Investors?
Banks and payment providers like Mastercard make money by collecting transaction fees, so they have a financial incentive to make cryptocurrency easy to buy and sell. By teaming up with banks to facilitate crypto transactions, companies like Mastercard will likely see a surge in transaction volume. That could be good for investors, because it will mean increased revenue for these companies. If banks and payment providers become more competitive in the race to facilitate cryptocurrency transactions, there is a good chance that consumers will benefit from lower transaction fees on crypto purchases. If that happens, it could open up the cryptocurrency market to a much larger group of people and result in billions of new investment dollars flowing into the digital asset space.
How Will This Help Banks and Consumers?
The banks that partner with Mastercard to facilitate crypto transactions will be able to improve their customer experience by making it easier to buy, sell, and send digital assets. Instead of having to open an account on a cryptocurrency exchange, send money to an account, and then wait for it to clear, investors will be able to link their credit or debit card to a crypto exchange and immediately buy or sell crypto. When people send money to someone else, they often use services like PayPal or Venmo. These services charge a fee for their services, but banks will be able to offer the same functionality for free. That means that banks will be able to offer more services for free and charge less for others, which could lead to increased profits and growth for banks.
If banks and other financial institutions increase their involvement in the crypto space, it could change the landscape of the market significantly by opening up investment opportunities for billions of dollars of new capital. That could result in increased volatility, but it could also push the price of cryptocurrencies higher and help the market reach the next level of maturity and adoption.