Mastercard Introduces New Initiative to Simplify Crypto Transactions and Curb User Errors

For the transactions that will be processed as part of this programme, Mastercard will act as an intermediary to verify a user's identity.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 30 May 2024 17:19 IST

Mastercard Introduces New Initiative to Simplify Crypto Transactions and Curb User Errors

Photo Credit: Pixabay/ Alina Kaptsova

Crypto wallet player FoxBit has also joined Mastercard’s initiative

Highlights

Mastercard is exploring ways to drive mass adoption of cryptocurrencies
Mastercard fears wrong crypto transactions could repel people from trying
Founded in 1966, Mastercard today has a valuation of $411.33 billion

Mastercard is exploring ways to simplify crypto transactions, which could lead to the mass adoption of these digital assets for day-to-day businesses. The US-based cards payments giant has introduced a new initiative to assess the use of its Crypto Credential programme. The aim of this programme is to ensure that people do not send crypto assets that are incompatible with certain wallets. Crypto exchanges Bit2Me, Lirium, and Mercado have been onboarded by Mastercard to assist in this pilot. Crypto wallet player FoxBit has also joined the initiative.

What led Mastercard to launch this initiative?

Through its research, Mastercard noticed several instances of wrong crypto transactions. Complicated wallet addresses or technical errors caused due to engagement of crypto tokens with wrong, incompatible blockchains emerged among top reasons that led to financial losses for senders and recipients.

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Owing to these risks, Mastercard fears, people could keep a distance from crypto-based financial transactions and remain stuck to online payment apps like Venmo and PayPal.

“As interest in blockchain and digital assets continues to surge around the world, it is essential to keep delivering trusted and verifiable interactions across public blockchain networks,” Walter Pimenta, executive vice president for product and engineering at Mastercard has been quoted as commenting on the development.

What will this Pilot programme offer?

For the transactions that will be processed as part of this programme, Mastercard will assume a centralised role and act as an intermediary to verify a user's identity. The company will further pre-screen transactions before they are processed to make sure that tokens being sent and the blockchain being used to receive these funds are correct. Mastercard will store the KYC details of the users who process transactions as part of this pilot within its own servers.

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The exchanges, that are part of this pilot, will first verify a user and issue simple alias to send and receive funds across all supported exchanges.

“When a user initiates a transfer, Mastercard Crypto Credential verifies that the recipient's alias is valid, and that the recipient's wallet supports the digital asset and associated blockchain. If the receiving wallet does not support the asset or blockchain, the sender is notified and the transaction does not proceed,” Mastercard said in its statement.

As per Mastercard, the use of its crypto credential P2P initiative represents the scope to expand and support the global remittance market. Founded in 1966, Mastercard today has a valuation of $411.33 billion (roughly Rs. 34,23,157 crore). In recent years, the company has shown an inclination towards exploring the crypto and blockchain avenues in revamping the existing financial systems.

In April, Mastercard launched a crypto credit card, CBDC partner programme, and crypto trading initiatives. The company's crypto credential vision was first unveiled in 2023.

It is, however, noteworthy that Mastercard has found itself being breached by hackers time and again. As per CoinTelegraph, 40 million Mastercard accounts have been breached since 2005.

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Further reading: Cryptocurrency, Mastercard, Crypto Exchange, Bit2Me, Lirium, Mercado, FoxBit

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More