Mastercard Inc. and crypto firm Bakkt Holdings Inc. partnered to enable cryptocurrency card payments. Banks will be able to issue debit or credit cards that let people pay with Bitcoin and earn cryptocurrency as rewards.
According to the WSJ, the companies announced the partnership to make it easier for banks, financial-technology firms, and merchants to offer and accept crypto payments. Banks and other financial institutions that issue cards through Mastercard will be able to issue cryptocurrency debit or credit cards that let people make payments and earn rewards in Bitcoin. Other cryptocurrencies could be added to the service later.
In February, Mastercard said it was preparing to support cryptocurrencies on its network. The network said at the time that more people were using cards to buy crypto assets such as Bitcoin and using crypto cards to access and convert these assets into traditional currencies for spending.
Major card networks and crypto fintech firms have announced other partnerships recently. In most of those deals, Visa or Mastercard serves as a network for a niche crypto card offered by the same fintech that houses the cardholders’ crypto assets. Bakkt, for example, currently offers its own Visa debit card.
The cards would give consumers the ability to pay merchants with Bitcoin. Bakkt would convert that cryptocurrency into currency that the merchant accepts before sending the transaction over the Mastercard network. That will happen when the consumer makes the purchase. The company says the conversion would be done instantaneously so that the merchant isn’t affected by the volatility of cryptocurrencies. Consumers’ cryptocurrencies would be stored in a wallet with Bakkt.
Also, the partnership would allow people to earn rewards in the form of cryptocurrencies rather than airline miles or other types of points. That offering could entice people who haven’t previously engaged with cryptocurrencies.
The latest announcement might potentially have more significant implications. Big banks would be able to offer crypto cards that are in part powered by Bakkt, potentially reaching a much larger number of consumers. Whether this broader offering takes off will in large part depend on banks’ appetite to issue these cards and consumers’ demand for them.
Bakkt shares more than tripled to $30.60 after the announcement. Mastercard shares rose 0.6% to $360.86.
As reported recently, Bakkt announced a partnership with Google to extend the reach and usability of digital assets to meet rapidly evolving consumer demand. Bakkt users will now be able to add their virtual Visa Debit cards into Google Pay, providing the ability to pay in crypto at a variety of online markets and stores, wherever Google Pay is accepted.