Stablecoins are the talk of the payments town, and some observers are questioning whether these new digital alternatives could undercut the core network businesses of Mastercard and Visa. Now, Mastercard Inc. has announced several initiatives it says will keep it in the thick of the growing stablecoin market.
In a post Monday on Mastercard’s Web site, chief product officer Jorn Lambert said Mastercard will join the Paxos Global Dollar Network to influence stablecoin adoption, enable the USDG, USDC, PYUSD, FIUSD stablecoins across its network, and launch new capabilities through other services.
“Mastercard is bringing the power of its global franchise to support a growing portfolio of regulated stablecoins from issuers around the world,” Lambert said. “In doing so, we’re ensuring that registered and compliant stablecoins are enabled across our network for consumers and businesses to use.”
Mastercard made a separate announcement regarding the new FIUSD stablecoin from the big payment processor Fiserv Inc., which is working with stablecoin issuer Circle Internet Group Inc. on the project. Mastercard will integrate FIUSDinto its global payments network, making the token available to more than 150 million merchants worldwide. The agreement also envisions issuance of stablecoin-backed cards for clients the two companies have in common.
Stablecoins are digital currencies tightly tied to the value of fiat currency such as the U.S. dollar, thus avoiding the wide swings in value that afflict Bitcoin and other cryptocurrencies and weaken their case as payment alternatives. According to Mastercard, the partnership with Fiserv will enable consumers and merchants to smoothly transition between fiat currency and FIUSD as well as let merchants settle payments in FIUSD.
“Our work with Mastercard is promoting greater reach and utility of stablecoins by helping our financial institutions and merchants enable greater payments choice to their customers,” Takis Georgakopoulos, Fiserv’s chief operating officer, said in the announcement.
In related initiatives, Lambert said Mastercard will enable transactions involving the USDG stablecoin from Paxos and is joining Paxos’ Global Dollar Network. As a result, Paxos can enable any Mastercard client institution to mint, distribute, and redeem USDG to their customers, according to Lambert.
Mastercard also is working with PayPal Holdings Inc. on future network settlement capabilities for PayPal’s stablecoin, PYUSD, which also is issued by Paxos. And Lambert said Mastercard is providing “ongoing support” for the Circle-issued USDC stablecoin, though he didn’t give details. “This multi-coin approach ensures flexibility, reach, and readiness for the next wave of digital-currency innovation,” he said.
Lambert said the company will enable cross-border stablecoin transactions through its Mastercard Move service. Mastercard also announced its Mastercard One Credential service, which the company says will give “consumers a flexible way to spend both fiat and stablecoin balances through a single product.” Mastercard is working with Fiserv on that initiative.
A June 24 online story in The Wall Street Journal says share prices for crypto firms such as Circle and Coinbase Global rose with the recent passage in the Senate of a stablecoin regulation bill, but shares of Visa and Mastercard slipped as investors assess the potential of stablecoins to disrupt conventional payments. Yet Lambert in his post said Mastercard, at least, has something stablecoins don’t—hence the reason for the plethora of new partnerships.
“We do this because stablecoins alone do not offer the global acceptance, security, reliability, consumer protections, and scale that have made card payments trusted and preferred by billions,” he said.