At a time when Nigeria’s Central Bank is denying its financial institutions the opportunity to stake a claim in the evolving blockchain market, global institutions like Mastercard are embracing cryptocurrencies.
Mastercard, one of the world’s top five issuers of card issuers said on Wednesday it is planning to start supporting select cryptocurrencies directly on its network. The company has the largest card market share in Nigeria as most of the operators in the financial services sector are its partner.
“Our philosophy on cryptocurrencies is straightforward: it’s about choice. Mastercard isn’t here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants, and businesses to move digital value – traditional or crypto – however, they want. It should be your choice, it’s your money,” Mastercard noted in a post.
The payment card’s position mirrors the position of its closest competitor, Visa. In an earnings call with analysts recently, Visa CEO Alfred Kelly said the company will treat the cryptocurrency market as two distinct segments: traditional cryptocurrencies, such as bitcoin and Ether; and fiat-backed digital currencies including stablecoins and central bank digital currencies.
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“In this space, we see ways that we can add differentiated value to the ecosystem. And we believe that we are uniquely positioned to help make cryptocurrencies more safe, useful, and applicable for payments through our global presence, our partnership approach, and our trusted brand,” Kelly told analysts.
The coming of institutions in the cryptocurrency market is a growing trend that goes way back to PayPal’s announcement in October 2020 when it said it is enabling its customers to buy, hold, and sell cryptocurrency directly from their PayPal account, and signalled its plans to significantly increase cryptocurrency’s utility by making it available as a funding source for purchases as its 26 million merchants worldwide.
After PayPal, there have been more institutions declaring a new found love for cryptocurrencies. Square owned by Jack Dorsey, Twitter’s CEO, invested $50 million in cryptocurrency also in October 2020. The biggest institutional investment so far has been Elon Musk’s Tesla acquisition of $1.5 billion bitcoin and a plan to accept the cryptocurrency as payment for its vehicles.
“Crypto will be like tokenization,” Victor Asemota, Africa Partner for Alta Global Ventures said on Twitter. “Everyone will have it eventually and regulation will not slow it down.”
New regulation by Nigeria’s CBN directed banks, non-banking institutions, and other financial institutions to close accounts of firms dealing in cryptocurrencies including exchanges. A situation that has seen the exchanges in the country suspend deposits in the local currency – naira. According to the apex bank, the opacity of cryptocurrencies makes them a favourite tool for cybercriminals, money launderers, and terrorist financiers.
Nonetheless, Mastercard and the institutions embracing cryptocurrencies seem to have the answer for the security of their customers.
To activate the Mastercard service, customers would have completed strict compliance protocols including Know Your Customer, a requirement meant to snuff out illegal activity and deception in payment networks. The company would only allow digital assets that follow local laws and regulations in the regions they are used.
To enable a seamless payment process using cryptocurrencies, Mastercard said it has been working with Wirex and BitPay since 2020 to create crypto cards that allow people to transact using their cryptocurrencies. It expanded the partnerships in 2021 by joining forces with LVL, an upcoming cryptocurrency exchange.
“This is the future of money and global institutions have realised they cannot stay by the sidelines,” Owenize Odia, Country Manager, Luno Nigeria said. “So they are coming on board. It tells you the level of maturity the market has seen and I believe in a very short time, regulators like the CBN will also see it. Luno is always ready to work with regulators to make the market a safer place for everyone.”
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