Mastercard, MetaMask and Baanx have collaborated to provide a pilot debit card enabling users that self custody their cryptocurrency to spend it at retail outlets. The cryptocurrency is automatically converted to Euros or Pounds at the point of sale. Earlier this year MetaMask reported 30 million monthly active users.
Initially the card is digital only. However, given that in Europe it’s easy to use digital wallets such as Apple Pay and Google Pay, that’s a practical approach for the pilot.
While the card is a great step forward for crypto usability, other features of the pilot could affect usability. Some of these may disappear for the full launch.
The biggest issue is it doesn’t support just any crypto in the MetaMask wallet. The crypto has to be held on the Linea blockchain, the layer 2 blockchain developed by MetaMask owner Consensys. Linea isn’t one of the most popular blockchains. For example, the combined market capitalization of the two largest stablecoins is just over $40 million. Initially the only tokens supported for Mastercard payments are USDC, USDT, and WETH.
So to use the card, a user would have to transfer the coins to Linea, which seems like a painful friction. We’d assume this might be just for the initial phase, but that remains to be seen.
Secondly, this pilot is only operational for a few thousand users in Europe and the UK. The lack of availability in the United States might be for regulatory reasons.
FX costs matter
It’s not clear how competitive the card will be on cost. Using the built in MetaMask token swap functionality is relatively pricey compared to Uniswap or centralized exchanges. It’s unclear who is providing the currency exchange rate, which is critical given the tokens will be converted from WETH or dollars to euros or sterling. Notably, there is no support for EURC, Circle’s regulated Euro stablecoin.
We recently compared conversions between Euros and US dollars between a couple of centralized cryptocurrency exchanges and the popular Wise multi-currency payments app. We expected Wise to offer the better rates, but we were wrong.
This Metamask-Mastercard solution will be on to a winner if it offers just as competitive exchange rates. Otherwise, price sensitive crypto users might be better off transferring their spending money to an exchange and using an exchange debit card or off-ramping to a bank account.
The third party in the relationship Baanx, which has experience with crypto card offerings and has its own Crypto Life card. When we asked who provides the FX rates, Consensys responded that the card program manager, Crypto Life, uses Mastercard scheme rates “which are some of the best in the market”.
Meanwhile, last year Mastercard in Australia launched the first card powered by a self-hosted wallet, Immersve.
Talking about the MetaMask deal, Raj Dhamodharan, EVP, Blockchain & Digital Assets at Mastercard said, “We saw a significant opportunity to make purchases for self-custody wallet users easier, more secure, and interoperable.” Mastercard is an investor in Consensys.
Edit: Added the detail that the FX rates are Mastercard scheme rates.
