Card payment giants Visa and Mastercard appear to be changing their minds over earlier plans to forge new partnerships with crypto firms.
US payment giants Visa and Mastercard are slamming the brakes on plans to forge new partnerships with crypto firms after a string of high-profile collapses shook faith in the industry, people familiar with the matter said.
The crypto industry saw a stunning reversal of fortunes in 2022 as bankruptcies of industry majors FTX and BlockFi rattled investors and increased regulatory scrutiny on the sector.
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Both Visa and Mastercard have decided to push back the launch of certain products and services related to crypto until market conditions and the regulatory environment improve, said the people, who asked not to be named as talks were confidential.
Major card firms had warmed to crypto as the popularity of the asset class exploded.
“Recent high-profile failures in the crypto sector are an important reminder that we have a long way to go before crypto becomes a part of mainstream payments and financial services,” a spokesman for Visa, the world’s largest payment processor, said.
That does not change the company’s crypto strategy and focus, however, the spokesman added.
A spokesman for Mastercard said: “Our efforts continue to focus on the underlying blockchain technology and how that can be applied to help address current pain points and build more efficient systems.”
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Over the past couple of years, major card firms had warmed to crypto as the popularity of the asset class exploded, with some touting it as the next big thing in finance.
Card companies, which pocket a small percentage of the dollar value of transactions they process, had announced multiple partnerships with crypto firms and put in place dedicated teams to explore blockchain technology.
Mastercard teamed up with crypto lender Nexo in April to launch what it called the world’s first “crypto-backed” payment card.
In November, Visa severed its global credit card agreements with FTX, just a month after announcing an expanded partnership with the exchange.
Card company American Express said in 2021 it would consider using crypto as a possible option to redeem reward points in the future. But it is not viewing crypto tokens as a strategic priority in the near term, a source familiar with the matter said.
“In the near term, we don’t see crypto replacing our core payment and lending services,” an AmEx spokesman said in an e-mailed statement, adding that the company continues to explore meaningful use cases for the technology.
“They cannot and should not move ahead until there is a clear regulatory framework,” said Thomas Hayes, chairman and managing member at investment firm Great Hill Capital.
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“Delays are not attributable to their core business — as that remains strong. They are related to an uncertain regulatory environment for crypto and demand/interest for crypto services declining in the near term.”
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry