Mastercard Trials Stablecoin Payments on its Transaction Network

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Mastercard has announced that it will be using Circle’s USDC stablecoin as a bridge asset to enable cardholders to pay for goods using cryptocurrencies. This move will allow cryptocurrency holders to spend their digital assets at merchants that accept Mastercard’s payment cards. In the pilot program, USDC will act as a bridge between the cryptocurrency in consumers’ digital wallets and the fiat currency paid to merchants. Although some may see this as an extra step, it can be quicker and simpler than going directly from crypto to fiat. Additionally, this move will assist cryptocurrency firms that want to offer Mastercard-branded products to their customers.

Aside from Circle, Evolve Bank & Trust and Paxos Trust Co. are involved in the pilot, though their roles are not clear. Mastercard is also “in discussions” with Evolve and Metropolitan Commercial Bank to issue crypto cards. While Paxos has its own collateralized stablecoin, Paxos standard, for now, USDC is the only stablecoin involved.

Mastercard has outlined foundational principles for stablecoin enablement and requires stablecoins to conform to these principles. The company is also in talks with Uphold and BitPay to provide digital wallet technology, and three traditional card businesses to handle back-end functions. The pilot program is expected to go live soon, though a specific date has not been determined.

Stablecoins, such as USDC, have been gaining traction as payment companies continue to trial them for transactions. Visa announced it conducted a small USDC transaction earlier this year. The growing scrutiny of stablecoins reflects their torrid growth, with USDC jumping sixfold since the beginning of the year, growing from around $4 billion on Jan. 1 to over $25 billion. Paxos standard has also grown over that same time period, while Tether has not issued any new tokens since May. Mastercard has not disclosed how it is verifying that stablecoins settled through the program are fully backed by reserves.