Credit card company Mastercard is open to the possibility of a digital currency as long as it is issued by central banks. According to an interview given by Mastercard co-president Ari Sarkar to the Financial Times, the company is open and receptive to a cryptocurrency backed by the government. Mastercard still holds the belief that digital currencies not backed by a central bank are “junk”. Sarkar declared that once governments seriously produce a national digital currency, only then will Mastercard look at virtual currencies in a “favourable way”.
Mastercard is serious in its efforts to adapt to emerging technology. The company is said to be heavily engaged in researching about blockchain as well as virtual currency. Thirty patents have been reportedly filed by MasterCard Labs. It similarly launched a crypto project in Japan and Singapore which enabled cardholders to “cash out of bitcoin on to a Mastercard”. Sarker highlighted Mastercard’s ability to be immune to the price fluctuations Bitcoin is usually prone to. However, the test program was not yet “of scale”. Sarker explained that the company does not operate bitcoin trading within the Mastercard network as it is fully aware of the reputational risks involved in the process.
Cryptocurrency is still generally frowned upon by both Mastercard and Visa. The Chief Financial Officer of Visa recently declared digital currencies as “speculative investments” which operate in a volatile regulatory environment. However, both Mastercard and Visa re-classified transactions purchased using cryptocurrency as cash advances, the implication of which makes it more costly for users to buy virtual currency using their credit cards.
Mastercard’s desire to see a future filled with central bank-issued cryptocurrency may be in the horizon due to countries such as China, Russia, Iran, Canada and Britain already considering to create one. So far, only the South American country of Venezuela has actually done so via the oil-backed digital coin called the Petro.