Industry

Mastercard Will Support Government Backed Cryptocurrencies but Not Junk

John McMahon | March 20, 2018 | 8:00 am
mastercard
Industry

Mastercard Will Support Government Backed Cryptocurrencies but Not Junk

John McMahon | March 20, 2018 | 8:00 am

Mastercard has announced that it is receptive to using nationally backed central bank issued digital currency in the future while holding on to its stance that all others are “junk”, The Financial Times reported.

Mastercard Will Deal With National Digital Currency

In an interview with the FT Ari Sarkar, Mastercard co-president for the Asia-Pacific region, spoke about the future of Mastercard concerning its relationship with cryptocurrency.

He said that the credit giant is willing to deal with cryptocurrency that is government backed. “If governments look to create national digital currency we’d be very happy to look at those in a more favorable way [compared with existing cryptocurrencies],”

While there is a long list of governments exploring a central bank backed cryptocurrency which includes England, Canada, China, Russia, India, Dubai, and Estonia, only Venezuela has actually launched one, and that to major international criticism.

This is not a change in stance from October 2017 when Mastercard CEO Ajay Banga referred to cryptocurrency as “junk” in a conversation with the Financial Times as he also said that if there were government-backed digital currency Mastercard would be involved. Saying at the time.

“If the government creates digital currency, we will find a way to be in the game. We will provide rails for moving currency from customer to merchant. The government mandated digital currencies are interesting. Non-government mandated currency is junk.”

Sarkar also talked about a pilot program in Japan and Singapore that would allow Bitcoin traders to cash out directly onto their MasterCard. Adding that “The pilot] is a toe in the water, we’re fully cognizant of the reputational risk.”

5% Fee With Interest

Earlier last month Visa and Mastercard created a backlash of criticism when it relabeled cryptocurrency transactions from “purchases” to “cash advances”. This meant that traders using their cards were being charged an additional five percent from the credit company on top of any fees charged by the exchange.

On top of the percentage added on as cash advance traders would also be charged interest from the moment of the purchase. In some reported cases the interest would be over 20%. Still, Mastercard has not been ignoring the developing technologies completely as Sarkar mentioned Mastercard Labs, the credit company’s research arm, has filed for more than 30 patents related to blockchain technology and cryptocurrency.

Recently banks including Lloyds of London, Virgin Money in Australia, and Citigroup in the US, have banned customers from using credit cards for cryptocurrency purchases.

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