The Largest Credit Card Companies Now Accept Crypto: What to Expect

For all the benefits they provide for revolutionizing the payment space, cryptocurrencies have continued to operate with several traditional financial industry elements for a while now. This integration is mainly understandable as traditional FinTech concepts make cryptocurrencies more accessible to everyday people.

The Largest Credit Card Companies Now Accept Crypto: What to Expect

Studies and research reports have shown that one of the many problems that cryptocurrencies have had with their adoption is the fact that they aren’t as simple to understand for the ordinary person. So, credit cards and more represent a means of endearing them to people and hopefully raising their appeal.

However, over the past year, there has been a significant push from payment processors and credit card manufacturers towards cryptocurrencies. The moves have been laudable, showing continued integration with crypto and traditional FinTech. However, they could also have some untold effects on the crypto industry at large.

The Big Players Move Into Crypto

Late last year, the tech and crypto industries got a jolt of life when PayPal announced that it would begin allowing crypto transactions on its network. The announcement confirmed that PayPal customers would be able to make Bitcoin payments to merchants and more, essentially drawing the leading digital asset closer to those who would like to use it for daily transactions.

Fast forward to 2021, and it has been the year of the traditional credit card companies. In February, Mastercard announced that it would allow its almost one billion users to accept and spend crypto. In its announcement, Mastercard explained that the move was in a bid to build loyalty with its existing customers and open the door to even more customers joining its network.

While the company explained that it would support stablecoins due to their reliability and security, it famously declined to mention the stablecoins - or even the cryptocurrencies - that it would allow. Mastercard also explained that it is engaging with several central banks to figure out the best way to help them launch and operate their central bank digital currencies (CBDCs). Of course, it didn’t mention any names in this regard as well.

Soon after the Mastercard announcement, VISA came with one of its own. In March, the company confirmed plans to pilot a program that would let its partners settle fiat-based transactions via the Ethereum blockchain.

As the announcement explained, VISA will partner with - a top exchange and card issuer - to offer a crypto settlement system that will allow fiat transactions. The system will launch this year, allowing VISA’s partners to exchange USD Coin over its network to clear fiat-based transactions.

Jack Forestell, VISA’S Chief Product Officer, said in the announcement, “Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors. The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency.”

At the same time, PayPal’s crypto integration has grown deeper. Last month, Dan Schulman, the company’s chief executive, told news sources that the firm plans to allow digital assets for payments soon. Schulman explained that PayPal would implement a crypto checkout service to enable users to pay for goods and services at approved vendors with their stored cryptocurrencies.

The PayPal system will provide quick transfers at the point of sale, allowing merchants to get equivalent fiat currency. It will support Bitcoin, Ether, Litecoin, and Bitcoin Cash at launch. All transactions will be free, although only one asset can be used for purchase.

Schulman added, “We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants.”

How Do We Move Forward?

The most critical benefit that these announcements have given cryptocurrencies is that the assets have moved from being just some form of experimental “online money.” day by day, cryptocurrencies show themselves to be a reliable asset class that is here to stay. Just like institutional crypto industry players have been quick to accept Bitcoin as an investment asset, these companies look to capitalize on cryptocurrencies’ other use case - payments.

VISA and Mastercard mainly process billions of dollars in transactions daily. With their entrance into the crypto space, it is evident that these assets are ready for more mainstream adoption.

As of Q4 2020, Mastercard had 246 million credit cards in the United States alone. Its worldwide haul stood at 966 million. On the flip side, VISA had 3.5 billion cards worldwide, with its network processing over 130 billion transactions annually.

Both companies have different goals and strategies for bringing crypto payments into their networks. They’ve also been relatively private about several things, including how their payment services plan to work. Mastercard hasn’t stated when its integration will come to life, and VISA appears to be looking to bring more partners into its service.

Still, the two companies coming into crypto is a big deal. For one, this integration is set to make cryptocurrencies more seamless when it comes to daily payments. In the quest for mass adoption, this is one of the most impressive steps forward that digital assets can take. It isn’t clear if merchants will need to opt-in to the networks to accept digital asset payments or if the payments will be available via default. Still, the fact that cryptocurrencies will be available to over 60 million merchants worldwide is a big win.

This move could also increase crypto demand, further strengthening the supply squeeze we witnessed in the early parts of the year. If that is true, cryptocurrency prices will spike once more, and investors will be smiling at the bank again. The excitement over these integrations is undeniably palpable - and it’s easy to see why.

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