Mastercard Incorporated (NYSE:MA) MA recently joined forces with one of the world’s leading cryptocurrency platforms, Coinbase (NASDAQ:COIN), to offer increased payment alternatives for consumers purchasing non-fungible tokens (NFTs) from the soon-to-be-launched Coinbase’s NFT marketplace.
NFTs are digital assets, the ownership and authenticity of which are verified by blockchain technology. Presently, the assets are most widely utilized in generating income for artists exhibiting their work online. The artists are entitled to receive royalties every time the NFTs are sold. The NFT marketplace of Coinbase, plans of establishing which were unveiled in October 2021, enables hassle-free minting and buying of NFTs.
By virtue of the latest tie-up between Mastercard and Coinbase, NFTs can simply be purchased with a MA card from the crypto platform’s (Coinbase) forthcoming NFT marketplace. This seems commendable as the usual process of purchasing NFTs involves customers holding a crypto wallet and then buying digital currencies. Following the same, they are equipped to purchase NFTs in an online marketplace.
The recent move aims to eliminate the layers and obstacles that prevail in the process of purchasing NFTs, thereby encouraging more customers to avail of NFTs and expanding the suite of NFT owners.
The latest move seems to be a well-timed one considering the fact that the digital asset holds immense growth potential amid a rapidly growing digital economy and rising Internet penetration. Its usage is expected to stretch beyond art and collectibles in the days ahead (per Mastercard’s management). Most people are now aware of the basic concept of NFTs, which was earlier restricted to a specific group of crypto and tech experts. However, confusion still remains regarding the implementation of NFT’s usage in everyday life. The MA and Coinbase partnership aims to address this very gap.
The recent initiative reinforces Mastercard’s efforts to bolster its presence in the growing crypto ecosystem. The technology company in the global payments industry pursues continuous endeavors to offer seamless cryptocurrency wallets and exchange experience, which has been resulting in more consumers shifting toward crypto cards for purchasing digital assets or incurring spending. MA has been undertaking significant investments in an effort to integrate blockchain technology with its global payments platform. Blockchain plays a crucial role in conceiving new asset classes ranging from NFTs, stablecoins to central bank digital currency (CBDC). The technology paves the way for rapid adoption of digital assets by offering tools and enhancing user experience, e.g., cards that consumers are acquainted with to access the new assets.
Mastercard has been collaborating with cryptocurrency platforms to bolster its crypto portfolio and tap the growing number of consumers entering the crypto space. For addressing risks that come hand-in-hand with online transactions, MA has cybersecurity protection solutions in place for the seamless operation of the crypto environment.
Similar to Mastercard, other companies, including Visa Inc (NYSE:V). V, PayPal (NASDAQ:PYPL) Holdings, Inc. PYPL and Block, Inc. SQ resorted to numerous initiatives to capitalize on the increasing popularity of the crypto economy.
The presence of a trusted payment facilitator like Visa, which has more than 25 digital currency wallets linked to its systems, further reinforces the belief of individuals in increased usage of crypto and digital currencies. V works closely with over 60 crypto platforms. In January 2022, Visa joined forces with ConsenSys for seamless integration of CBDC networks within the financial ecosystem.
PayPal enables customers to trade crypto assets through its digital wallet. PYPL offers a place called Checkout with Crypto, which facilitates seamless online purchases utilizing cryptocurrencies. In August 2021, PayPal unveiled its cryptocurrency service in the U.K., thereby marking its foray into the country’s crypto market.
Block has made substantial investments in purchasing bitcoin (a crypto asset) over the years. The entry of SQ into the bitcoin market with the Cash App product continues to contribute significantly to the company's quarterly results. In the third quarter of 2021, Cash App produced $1.8 billion of bitcoin revenues and $42 million of bitcoin gross profit. The figures improved 11% and 29% year over year, respectively.
Shares of Mastercard have gained 9.3% in a year against the industry’s decline of 16%.
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MA currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Visa stock has gained 4.7% in a year. Meanwhile, shares of PayPal and Block have lost 28.6% and 42.6%, respectively, in the same time frame.
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