In September, Mastercard acquired CipherTrace, and now it has announced a partnership with Bakkt, but products may take some time to appear. Bakkt offers Mastercard the ability to offer crypto custodial services. However, four challenges may delay issuer productization: First, issuing banks need to decide they want to offer crypto services. Second, even if offered independent of the core system, each issuer will need to provide customer access to the crypto assets through its online and/or mobile banking channel. Third, those crypto assets will ultimately need to be reflected in the customer’s account overall balance that sits in the core system. Lastly, the crypto assets will need to be linked to the issuers’ cards so the assets can be spent.
Mastercard, similar to the arrangement Bakkt made with Fiserv, will also offer crypto acceptance to merchants:
“On Monday, Oct. 25, Mastercard announced it would be working with digital asset platform Bakkt to allow its United States-based customers to buy, sell and hold digital assets through custodial wallets. On the same day, global payment provider Fiserv also announced a strategic collaboration with Bakkt to offer merchant-facing digital asset services.
The news drove a bullish day of trading for BKKT, with the stock rallying by more than 50% outside of regular trading hours from Friday, Oct. 22’s closing price of $9.15, before surging a further 120% to close out Monday, Oct. 25 at $30.60.
While Bakkt’s debut on the New York Stock Exchange saw its share price pull back by 6% to close out its first day of trading, BKKT has since rallied more than 236% from $9.09 to $30.60 over the past five days.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
