This year a range of large American and British banks barred their customers from purchasing cryptos using their credit cards. That has been done in order to prevent risks related to the volatility of cyber money – once a client piles funds from the credit card into cryptos, he/she might not get any revenues, hence, the debt might not be paid back.
So the banks thought the ban could help them to survive in the world, which is being conquered by virtual assets. However, the prohibition appeared to be a double-edged sword as now it is Mastercard which suffered losses due to the ban on cryptos by major banks.
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Mastercard Regretting It?
The quarterly growth of the American multinational financial services corporation – Mastercard – has not been really pleasant. And the company blames it on cryptos.
The fact that the purchase of cryptos with credit cards dropped, has had its impact on the corporation, a Mastercard’s representative announced during this week’s earnings call.
The cross-border volumes increased by 19%. However, from the fourth quarter, that number decreased by 2 percentage points. One of the reasons, the company explained, was that fewer clients purchased cyber assets using their credit cards.
In particular, its top financial officer Martina Hund-Mejean said, as CNBC quotes:
"This is due to the recent drop-off in crypto wallet funding. We expect cross-border growth to moderate somewhat."
Actually, all users of Mastercard credit cards are free to use them in order to buy cyber coins. But the thing is in notorious banks which decided to stop being friendly towards cryptos.
Among these gigantic financial institutions, there are Citigroup, Bank of America as well as JPMorgan Chase. Their clients can no longer (since February 2018) buy cryptos using credit cards and later store them in crypto-wallets. As an excuse, all the companies referred to bitcoin’s and its brethren’s volatility and jeopardies related to it.
Asian Unrest
Ajay Banga, the exec of Mastercard said there is even some indeterminacy in Asia. The CEO also pointed out that some cyber money trading bourses are backing down in South Korea. At the same time, those located in Japan are concerned about safety. By the way, there are worries in the last one because of the top crypto-bourses there got hacked. And it was Coincheck. Therefore, Banga concluded that nowadays there is less interest in cryptos in Asia than there was before.
As per Coindesk data, bitcoin started out 2017 at a rate below $1,000, and by the end of the year its price crept up to the margin of $20,000. However, this nearly 1,500% growth was later diminished because of the correction in 2018. Within the first quarter of the current year, the most known cyber-coin lost about half of its value.
Despite all that, Mastercard’s exec emphasized this week that virtual money are not a top priority in the corporate strategy of the corporation – indeed, it takes only a small part of it. The reason is that cryptos are difficult to be predicted. Banga said:
"This is not something we count on because we just don't know how to predict it or we don't even want to count it.”
Moreover, digital coins are not even the crucial factor for Mastercard’s value, the analyst at Susquehanna Financial Group James Friedman says. However, crypto-factor is still curious, he said. Friedman explained that the job of financial services corporations is to carry out transactions anywhere their client uses the card. And when it comes to cryptos, there should be no difference. However, he said that is not really true about Mastercard's investment issue, so there is no reason to castigate it.
