Creditcard Companies Are Extending Their Support For Crypto.
Credit card companies Visa and Mastercard will both expand support for cryptocurrencies such as bitcoin.
Mastercard states in a press release that it wants to enable payments in cryptocurrency through its network. In turn, VISA announced that partners would soon be able to offer bitcoin management and exchange services to their customers through them.
The race seems to have started. Since payment services PayPal and Square embraced bitcoin and achieved great success, the competition cannot lag. Credit card companies Visa and Mastercard recently announced that they are also stepping up their support for digital currencies such as bitcoin.
Visa has also been offering the option to pay with bitcoin through their network for a while. For this, it works together with about 35 exchanges and wallet providers.
Usually, these are payment cards to which consumers can deposit a balance, after which they can pay with affiliated retailers. Limited cash withdrawals from ATMs are also possible. Sometimes the payment cards also offer a cashback, whereby consumers receive a percentage of the purchase amount back in bitcoin with every purchase.
Visa recently announced that it is further expanding its services about bitcoin and other cryptocurrencies. It will offer an Application Programming Interface (API), which enables Visa partners to offer their customers the ability to buy, sell and store bitcoin.
Mastercard has announced in a press release that it will integrate cryptocurrencies into its payment network this year. According to Mastercard, there is an undeniable trend among consumers to buy or spend cryptocurrencies. It, therefore, wants to prepare for the future and support cryptocurrencies from this year.
As a result, Mastercard customers will use their existing accounts to buy, store and pay for cryptocurrencies such as bitcoin at affiliated retailers.
The press release does not state which cryptocurrencies are involved, but it does state that it concerns a limited selection. Mastercard said price volatility, consumer protection, and regulation play a role in the choice. So it is not entirely certain whether bitcoin belongs to the selection, but it would be surprising if not. After all, Bitcoin is the most popular, and other cryptocurrencies are usually more volatile and often subject to different regulations.
How it works under the hood is still unknown. Mastercard is probably following the example of PayPal, in which Mastercard as an intermediary takes on the management of the cryptocurrencies on behalf of their customers. Due to Know-your-Customer (KYC) regulations, there is a good chance that Mastercard will not facilitate payments to and from parties outside their network.
Mastercard emphasizes that they do not want to give the impression that they recommend buying or using cryptocurrencies. According to the press release, it is mainly about offering consumers choices.
In collaboration with partners, Mastercard has previously released payment cards that allow payments in bitcoin. Also, the payment is switched during the transaction so that the merchant receives a regular currency. The success of those initiatives contributed to Mastercard’s decision to integrate cryptocurrencies into their network. It seems that under the new plans, it will also be possible to receive the payments in bitcoin without converting to a regular currency.
Thanks to bitcoin's embrace by traditional financial services providers, the ecosystem around bitcoin continue to grow. It probably also does a lot of good for bitcoin recognition and legitimization.
Yet, there are some catches in the grass. Most financial service providers, including Visa and Mastercard, seem to intend to mainly act as intermediaries for bitcoin payments. This is not surprising but remarkable since one of the hallmarks of bitcoin is that no intermediaries are needed.
Consumers who use bitcoin through such service providers, therefore, miss most of the innovations of decentralization. Since the service provider centrally manages all client funds, it is usually the case that only the service provider has a real bitcoin wallet. On the other hand, customers get a view of their balance in their account, and when they make a transaction, this is done via the wallet of the service provider.
As a result, service providers can refuse specific transactions or general services, freeze accounts, make demands, and in theory, even apply fractional banking. With such service providers, consumers do not really control their bitcoin themselves. Sometimes there is even no possibility to withdraw bitcoin to your own wallet. Moreover, the service is not free.
Therefore, such services seem mainly suitable for people who mainly approach bitcoin as an investment object or as a means against inflation. It can also be useful to use such services for a short period of time to purchase. However, if you want to manage your savings yourself and do not want to deal with dependencies or intermediaries, your own bitcoin wallet is still essential.
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