Visa might be doing all that it can to distance itself from Bitcoin, but Mastercard is adopting a different approach. The company has actually been fairly open about how it has helped facilitate Bitcoin purchases. For those new to the crypto market, making a purchase via credit card is often the easiest route to Bitcoin ownership. Mastercard has reaped the benefits of this and it has certainly shown within the company’s bottom line. However, in the wake of Bitcoin’s Q1 2018 price dip it appears that the interest in buying cryptocurrency has slowed, with Mastercard blaming this for a fall in growth.
Cooling cryptocurrency interest
The leading digital payment provider has seen its cross-border volume drop by 2%, as fewer people were buying Bitcoin and other digital currencies with a credit card. Speaking on a recent earnings call, Martina Hund-Mejean (Mastercard CFO) said, “This is due to the recent drop-off in crypto wallet funding. We expect cross-border growth to moderate somewhat.”
Mastercard has revealed that South Korean questions regarding the legality and Japanese security issues have seen cryptocurrency buyers pull back. “There’s a lot of concerns even in Japan because one of their biggest exchanges got hacked. As you can see, right now there’s a little less interest than there was in the latter part of the fourth quarter and the first quarter.” said Ajay Banga (Mastercard CEO). Many banks have prohibited the purchase of cryptocurrencies, including the Bank of America, Citigroup, and JPMorgan Chase. These bans occurred almost in unison back in February, with the banks declaring potential credit risks and price volatility as the reason behind the new measures. It’s evident that Mastercard is still feeling shockwaves from the implementation of these bans.
No cause for concern
Echoing comments made recently by Nvidia CEO Jensen Huang, Mastercard has stressed that cryptocurrency isn’t a key part of the company’s corporate strategy. “This is not something we count on because we just don’t know how to predict it or we don’t even want to count it,” said Banga. Mastercard’s links to cryptocurrency are interesting, but James Friedman (Susquehanna Financial Group Analyst) believes that it doesn’t hold much relevance to Mastercard’s business. He said, “It’s their job to transact anywhere that the consumer or merchant carries their card, and cryptocurrencies is the place it’s showing up. But, I don’t think it’s relevant to the Mastercard investment thesis, we won’t penalize them for it.”
Returning to form
During Q4 2017, Bitcoin’s price rise had the world in a frenzy, as it hit a staggering $20,000. Since the turn of 2018, Bitcoin has experienced an extremely harsh price correction, losing approximately half its value during the first three months of the year. While the leading cryptocurrency might have been on the ropes, it certainly wasn’t down for the count. In recent weeks, Bitcoin has shown signs of a turnaround, reaching $10,000 this past week.
