Today Mastercard and Island Pay announced the launch of a Bahamian prepaid card that supports the local central bank digital currency (CBDC), the Sand Dollar. Cardholders can convert their Sand Dollars to conventional Bahamian dollars and use the card to pay for goods in the Bahamas or anywhere in the world where Mastercard is accepted.
While many announcements claim firsts, this is probably the first card to support a fully-fledged CBDC. The Sand Dollar was launched in October 2020.
Every country has different motivations. While there were multiple drivers, one of the biggest was the sheer cost of distributing cash amongst Bahama’s 700 islands and the shuttering of banks and ATMs in recent years.
“The Central Bank of The Bahamas will continue to encourage fintech developments that tie into the Sand Dollar infrastructure, while allowing us to satisfy best global practices for regulation of the space,” said John Rolle, Governor of the Central Bank of the Bahamas.
Island Pay isn’t new to the Sand Dollar. It received a Bahamian payment service provider license back in 2018 and has a mobile wallet app where users can select Sand Dollars or Bahamian dollars for transactions.
The news is consistent with Mastercard’s announcement last week when it said it would natively support cryptocurrencies. At the time, it made clear that it meant CBDCs and regulated private stablecoins, although this has been widely misreported as including Bitcoin.
That said, Mastercard does support cryptocurrency partners, including exchanges, which enable holders to spend their cryptocurrency. But the cryptocurrency aspect is handled by the partners, not natively by Mastercard.
This CBDC initiative is also consistent with Mastercard’ program targeting central banks. It set up a CBDC testing program for central banks to allow them to test use cases.
“This partnership is an example of how the private and public sector can rethink what’s possible, while delivering the strongest levels of consumer protection and regulatory compliance,” said Raj Dhamodharan, EVP of Digital Asset & Blockchain Products & Partnerships at Mastercard. “We’re creating a lot more possibilities for governments, shoppers and merchants, allowing them to transact in an entirely new form of payment.”
