Once again we see evidence of how payment platforms are embracing digital assets. Mastercard’s Start Path program, implemented in 2014 to help businesses gain traction and scale, is a good example. Since then, Mastercard has announced a new global initiative involving 7 fintech start-ups, all of which are focused on developing crypto services. Mastercard has reported: “We believe we can play a key role in digital assets, helping to shape the industry and provide consumer protection and security. Part of our role is to forge the future of cryptocurrency, and we’re doing that by bridging mainstream financial principles with digital assets innovations.” Meanwhile, hot on Mastercard’s heals is Visa, having written a blog post titled: “Advancing our approach to digital currency”. Included in the blog was: “We’re reshaping how money moves across the globe, and that means pursuing a broad array of technologies and partnerships. In that regard, digital currencies offer an exciting avenue for us to continue doing what we do best: expanding our network-of-networks to support new forms of commerce. Fiat-backed digital currencies, commonly referred to as “stablecoins,” have emerged as a promising new payment innovation, combining the benefits of digital currencies with the stability of existing currencies like the US dollar. It’s a concept that is gaining traction beyond fintechs, and now includes financial institutions and central banks.”
Furthermore, PayPal’s CEO, Dan Schulman, has been very optimistic about PayPal’s involvement with cryptocurrencies. In a recent presentation to investors discussing PayPal’s latest earnings Schulman expanded on the features his company was introducing. He did also spend some considerable time expanding on Central Bank Digital Currencies (CBDCs), remarking that: “We are working with regulatory agencies, central banks across the world. The number of countries that are looking at CBDCs, central bank issued digital currencies is increasing rapidly. You’re like at 40 countries six months, a year ago. You’re almost up to 100 countries looking at it right now.” Added to this, ApplePay (with its 500 million customers) would also appear to be looking to embrace cryptos; it has a recent job posting advertising that it is looking for staff with: “5+ years’ experience working in or with alternative payment providers, such as digital wallets, BNPL, Fast Payments, cryptocurrency and etc.” UnionPay, the world’s biggest payment platform, although not that particularly well known outside of Asia, has 5 billion UnionPay payment cards in issue. UnionPay has an estimated 270 million internet shoppers as clients and it is worth remembering that in China, alone, on-line shopping is expected to be in excess of $2.3 trillion in 2021. Whilst there have been few recent new developments from UnionPay regarding its crypto plans it did announce at the end of 2020 that it was launching a payment card with the Korean payments firm, Danal, to offer its Paycoin cryptocurrency as an option.
One thing all the payment platforms will need to consider is the forthcoming new money laundering regulations. The EU’s Sixth Anti-Money Laundering Directive (6AMLD) has proposals to include a crypto currency sector. Therefore, those firms involved with handling cryptos will be required to verify the identity of those sending and receiving transactions. Following BREXIT, the UK will not implementing 6AMLD but HM Treasury has published a consultation and is potentially looking to implement Financial Action Task Force (FATF’s ) “Travel Rule” for crypto assets. In view of this, firms handling crypto assets will need to be able to track and transfer the ownership of crypto assets for their clients and be able to pass this information to other organisations.