Who has the best shot at taking crypto payments mainstream?

February 12, 2021 12:01 AM

The world's largest companies are finding it harder to ignore bitcoin and other cryptocurrencies, with many announcing plans to embrace digital assets as valuations soar.

Mastercard recently said it would support direct payments for some cryptocurrencies, starting later this year. That's a major boost for crypto transactions, though like any other company that's expanding its cryptocurrency strategy, Mastercard will have to convince merchants and consumers to get on board.

In the runup to Mastercard's announcement, several other recognizable brands have accelerated crypto plans or are jumping in for the first time. Each company has added more users and brought more interest into crypto and blockchain. Their goal is to make the process of paying in cryptocurrency as straightforward as using cash or a credit card.

Mastercard

Bloomberg

While the breadth of its support is still in question, Mastercard's announcement that it would directly process cryptocurrency payments in its network could lead to exponential growth in the number of merchants that allow direct cryptocurrency payments at the point of sale.

It also positions Mastercard to be a major processor of central bank digital currencies. Mastercard is accepted at 37 million merchants in 210 countries.

BNY Mellon

Bloomberg

Just a day after Mastercard's announcement, BNY Mellon announced it would hold, transfer and issue bitcoin and other cryptocurrencies for institutional customers.

BNY Mellon plans to form a digital custody division later in the year to serve clients interested in cryptocurrency.

Other major banks are also active in crypto, notably JPMorgan Chase, which recently reorganized its blockchain activities to concentrate on software and to promote its JPM Coin. And Citigroup launched a digital asset receipt product about two years ago.

Visa

Bloomberg

Visa wants to take part in the rampant development of stablecoins and central bank digital currencies, and the card brand spent a chunk of its January earnings call making its pitch.

The discussion was, in part, a way to reassert Visa's relevance to the tech sector after it scuttled its plan to purchase the data aggregator Plaid. In the crypto community, there's a growing interest in stablecoins, which link their value to a government-issued currency such as the U.S. dollar as a way to avoid the volatility associated with bitcoin and other cryptocurrencies.

"We can add a differentiated value to the crypto ecosystem," said Alfred Kelly, Visa's CEO. "We are uniquely positioned to make stablecoins more safe."

Uber

Bloomberg

The ride hailing company reportedly considered using corporate cash to invest in bitcoin but rejected the idea. It is now considering accepting cryptocurrency for payments.

CEO Dara Khosrowshahi told CNBC that bitcoin is too speculative for an investment but is in line with Uber's philosophy of supporting as many currencies as possible for ride sharing, delivery and related businesses.

Uber's brand is built partly on how easy it is to pay drivers. As consumers accrue more crypto through investment, or if crypto payments become more popular, it would make sense for Uber to add it as a payment option.

Tesla

Bloomberg

Bitcoin's value shot past $45,000 after Tesla notified the Securities and Exchange Commission it bought $1.5 billion worth of the cryptocurrency.

The automaker is looking to diversify its investments and create a monetary flow to enable bitcoin payments for its products. The announcement was influential mostly due to Tesla CEO Elon Musk's fame and the flurry of news and speculation that followed.

Amazon

Bloomberg

The e-commerce giant recently floated a potential digital currency project in Mexico.

It's early stage, but Amazon is looking for ways to add value for its Prime consumers, according to Coindesk. Amazon shoppers will be able to convert cash to digital currency, which will be usable across Amazon's range of shopping, entertainment and related content.

A digital currency could provide another way for Amazon to keep shoppers inside its ecosystem, pairing its payment app with shopping, incentives and delivery.

Diem

Bloomberg

Diem, the Facebook-affiliated stablecoin project, is nearing launch following two years of tweaking its model to address regulatory concerns and to deepen separation between the stablecoin and the social network.

Mastercard and Visa were original partners in Diem, when it was called Libra, but left during the regulatory heat that accompanied the project's early stages. Both brands said they would consider supporting the Facebook-affiliated project later, and any partnership could contribute to interoperability.

Central banks

Bloomberg

Numerous governments are planning central bank digital currencies. China has taken the lead, though the EU, Bahamas and several countries in Europe are testing CBDCs.

In the U.S., the pandemic has spurred stimulus packages that include direct payments to most Americans. The uneven rollout of these payments has created momentum for a CBDC or "digital dollar" in the U.S., which will likely include support from private financial institutions.

PayPal

Bloomberg

PayPal has allowed customers to buy, hold and sell cryptocurrencies since October 2020, and plans to support crypto as a funding source for its 29 million merchants by the end of the first quarter.

PayPal's crypto model at the time of the announcement was more direct than the card brands, avoiding the use of third parties to convert the coins into traditional currency.

The popularity of crypto investing has boosted PayPal's earnings, resulting in a record year in 2020 and positioning both PayPal and its Venmo subsidiary to influence merchants to directly accept cryptocurrency. PayPal also plans to expand its crypto support to the U.K. over the next several months and is positioning itself as a central bank digital currency distributor.

Square

Bloomberg

Square and Twitter CEO Jack Dorsey has become a major supporter of bitcoin, saying it will become the primary currency of the internet.

Square enables bitcoin investing, an activity that has grown more than ten-fold on Square's platform over the past year.

Bitcoin support has become a major driver of Square' financial performance. Square has also formed a team to work on bitcoin related projects and use cases, but thus far the company does not have plans to develop its own digital currency.