Explainer: Mastercard to expand its crypto payment card program; Know the crypto cards

Mastercard has planned to expand its cryptocurrency payment card program by focusing on collaborating with other new crypto firms. 

This is not the company's first foray into crypto-related card services, as Mastercard has previously collaborated with other exchanges like Nexo, Gemini, and Binance for the same reason. In January 2023,  Binance and Mastercard announced the launch of the Binance Card in Brazil.

What does the partnership  mean for Mastercard? 

While expressing the excitement towards Mastercard's expansion, the head of Mastercard’s crypto and blockchain, Raj Dhamodharan, said, "We have dozens of partners around the world who offer crypto card programs and they continue to expand. Mastercard is really quite enthusiastic about the underlying blockchain technology that powers cryptocurrencies." 

He continued to shed light on the partnership of Mastercard with other crypto exchanges and emphasised on the aspect of safety assurance in performing crypto transactions. 

After several major cryptocurrency businesses failed last year, including the collapse of the major crypto exchange, FTX, banks have grown wary of dealing with cryptocurrency clients. In the meantime, American regulators are stepping up their enforcement of market regulations that they claim are not being followed. 

Launch of crypto cards 

Crypto debit cards were created because of the need to push for crypto's mainstream adoption. 

Financial service providers, both traditional and startups, are looking for ways to attract customers with crypto. Instead of having a credit card that provides travel rewards and purchases cash back, there are credit cards which offer rewards in cryptocurrencies. 

For instance, while using the  BlockFi Rewards Visa Signature Credit card the company  provides cardholders with almost 1.5 percent back on all eligible purchases, along with 2 percent back in crypto on all crypto purchases over $30,000 of annual spending. 

Moreover, if a user does not like to use credit cards, then they can even use debit cards, such as Coinbase and Crypto.com debit cards. 

Instead of making a user wait for the monthly statement to come, the Gemini Credit Card deposits cryptocurrency right into your Gemini account each time a user swipes their card, providing them immediate access to rewards.

Visa and American Express take on crypto credit cards 

Although Visa has terminated its global credit card agreements with FTX, it has made $2.5 billion in payments with its crypto-linked cards in its fiscal first quarter of 2022. The CFO, Of Visa, Vasant Prabhu, in the wake of this advancement, mentioned, “People are using their crypto-linked cards to spend in a variety of ways, retail goods and services, restaurants, travel.”  

On the other hand, American Express said in February that it did not see cryptocurrencies as a practical replacement for its current payment and lending services in the near future, despite having said in 2021 that it would consider adopting them as a potential method of redeeming reward points. 
Important things to keep in mind while considering buying a crypto card

• Flexibility to invest - When it comes to earning rewards, each crypto card has a different portfolio of cryptocurrencies to earn the same. So for example, if a user plans to invest in certain coins, it's crucial for them to find out the card and exchange that allows their need to be fulfilled, before finally making the decision. 
   
• Benefits - It's crucial to be aware that many crypto cards are ‘bare-boned,’ which refers to a fixed-income security owned by the bearer or cardholder, and thus requires the user to think twice before finally making a decision while buying a crypto credit card. For instance, someone who travels frequently would find a travel rewards credit card to be more valuable than others. Similar to this, a cash back credit card can be a good choice for someone who wants to save money each month on their usual purchases. 
   
• Limitations - Not every crypto card is accessible to everyone due to various state regulations across the U.S. It becomes a necessary step to check each card's terms and restrictions to verify if your state of residence is an eligible one before applying. The ideal place to manage your cryptocurrency rewards is inside the United States because if you manage your account outside of the country, you can be breaking international law.