How does blockchain impact Mastercard?

Standard DAO
Published in
4 min readSep 9, 2022


There is a rhetoric that Mastercard and other payment processors will soon be facing a significant downturn in business due to the fact that companies such as Amazon have already started to replace existing settlement rails with cheaper blockchain alternatives. While this is something that Amazon is first to market in doing, it is the first step in setting the tone for other large and small companies to follow this trend which will significantly impact current transaction methods. There is plenty to discuss around this, but what is clear is that existing payment rails MUST figure out alternatives in order to compete with this new blockchain technology. As Mastercard has likely figured out, there are ways to compete, and one way is to be the creator of such payment protocol.

Mastercard’s Existing Blockchain Investments

Mastercard has filed a number of blockchain related patents. Many of which are geared towards allowing for the exchange of currencies (both fiat and crypto) to be handled offline without the need for internet connection. Additionally, a number of patents have been created to allow for the smooth transaction of goods and items using cryptocurrencies. These transactions would be backed by stablecoins, which would prevent volatility of cryptocurrency value from interfering with transactions. A particular patent specifically highlights this use amongst the broader public by attempting to protect consumers from sending crypto to the wrong address.

In regards to their investments, Mastercard has invested in a number of companies that are focused on enhancing accessibility, affordability, and financial equity. According to data from Crunchbase, Mastercard has invested over $150 million in a company called Ellevest, which helps women achieve their financial goals. Other heavy investments include companies that use AI to improve onboarding for financial programs, providing equity and investment capital to retail companies, and identity and authentication service platforms. Each of these seem tied to cryptocurrency in some way, as they are all related to securing financial platforms, improving financial access, knowledge, and privatization of transaction processes, or making it easier to conduct business using fintech.

Comparison to the Ethereum Network

Ethereum settled $1.5 trillion in transactions in Q1 2021[1], largely due to a mix of speculation and the creation of more applications being created on top of Ethereum.

​​”As crypto networks evolve, they are likely to provide strong incentives to unlock further state and create open services in many areas dominated by closed ones today.”[2]

Ethereum is in the business of selling blocks, earning revenues from securing bundles of transactions. Ethereum has an annualized total revenue of $9.9bn as of March 2022 and a conservative forecasted growth to $180bn in revenues by 2032. By comparison, Mastercard had $18bn in revenues in 2021. In many ways, Ethereum is the killer app that competes against payment processors like Mastercard and Visa.

The high transaction fees on Ethereum have opened up competition from other smart contract blockchains like Solana and Polygon that offer less security but cheaper fees. Ethereum has a user base of 3.9 million active wallets as of February 2022, according to Glassnode. By contrast, there are over 1.46 billion Mastercard debit cards in circulation worldwide by the end of the fourth quarter 2021.

The massive user base advantage that Mastercard retains gives the company options in how to respond to the competitive pressure from blockchain.

  1. Embrace Ethereum as the most trusted brand in secured transactions
  2. Acquire a controlling share of an existing Ethereum blockchain competitor
  3. Build a new blockchain competitor to Ethereum based on proprietary intellectual property [3]

Scenario 1: Embrace Ethereum

This is the most likely scenario given the current momentum. Mastercard would build oracles to enable payments to flow more seamlessly between crypto and fiat funds. Wouldn’t try to own the decentralized payment rails, but function as an exchange rate operator. Earning fees by giving liquidity between fiat and crypto. Some existing startup investments in the Start Path Crypto program support this scenario, including _

Scenario 2: Acquire & Compete via Avalanche

With the investment in Ava Labs and alignment with the Avalanche blockchain network, Mastercard already has an option placed.[4]

Avalanche is a very competitive smart contact chain to Ethereum. There isn’t as much of a user base or market cap (needs stats), but the investment in Ava Labs might offer the ability for Mastercard to own some/all of the payment rails. Mastercard would then throw its marketing muscle and embedded user base towards Avalanche. This path might make sense to traditional M&A companies, but it goes against the ethos of the decentralized finance movement.

New institutional projects coming should focus on interoperability and inter-blockchain communication which increases transaction finality. It’s important to build on a programmable protocol that already makes provision for Tendermint and IBC (Inter-Blockchain Communication). [5] Avalanche, Cosmos, and Polkadot are technology leaders in interoperability, which seems to be consistent with Mastercard’s philosophy. Mastercard has always been about choice: to enable consumers, merchants, governments and businesses to move digital value however, and whenever, they want.

Scenario 3: Build & Own

This is the most expensive and high risk option for an established company. Facebook/Meta is trying to do something similar with their virtual metaverse project but the effort isn’t yet successful. The decentralized community would need assurances of immutability, decentralized ownership, and governance to support such a project.

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