Mastercard has partnered with popular decentralized finance (DeFi) wallet, MetaMask, and digital payments company, Baanx, to launch a self-custody debit card pilot program for select users in the United Kingdom and the European Union, with plans to roll out the product in other regions over time.
The Metamask Mastercard allows users of self-custody wallets to make card purchases everywhere Mastercard is accepted — while retaining personal custody of the funds until the moment of purchase, and with greater security provided by Mastercard's existing systems and controls.
MetaMask's self-custody wallet will support the Mastercard debit card. Self-custody wallets are also referred to as "non-custodial wallets". They’re different from the crypto wallets offered by centralized exchanges in that the owner of a self-custody wallet maintains control over their digital assets, rather than entrusting them to an intermediary.
Lorenzo Santos, the senior product manager for Consensys, the blockchain company behind MetaMask self-custody wallets, says
It’s like having cash in your wallet instead of your bank account...You’re responsible for safeguarding that cash, and you can access it anytime.
Historically, it has been hard for people to easily spend self-custodied digital assets on anything beyond the crypto world. For example, if someone wants to spend their digital assets, they would first need to move them to an exchange and convert them to fiat currency before transferring them to a traditional bank account. This has made self custodied crypto assets hard to spend for everyday purchases.
Some centralised crypto exchanges have addressed the problem by working with issuing banks, payment networks like Mastercard and other technology enablers to launch branded debit or prepaid cards, with the same safeguards required by local regulators. Metamask’s Mastercard for self-custody wallets breaks new ground by allowing crypto users to self-custody and spend directly.
Meanwhile, Apple has announced that it will open up its NFC chips to third-party app developers, potentially paving the way for crypto developers to integrate blockchain-based contactless payments using Apple devices such as iPhones and iPads.
Jeremy Allaire, the CEO of stablecoin firm Circle, said on X that his firm is planning to introduce tap-and-go USDC payments on iPhones:
He later added that,
This would allow a [point of sale] to tell an iPhone what blockchain address it will accept USDC on, or the amount to pay, and then the iPhone-based wallet app could prompt the user to confirm a payment (like with FaceID) and initiate a transaction over the blockchain to settle the USDC,
Apple's move could open up a powerful pathway for direct to merchant USDC payments. Additionally, Allaire explained that Apple’s opening up access to its NFC chip would apply to “lots of things” outside of USDC, including non-fungible tokens (NFTs) for tickets, other certificates, and other stablecoins.
Notably, Apple said the APIs would be made available to developers in Australia, Brazil, Canada, Japan, New Zealand, the United Kingdom, and the United States but made no mention of the European Union.
The latest announcements by Mastercard and Apple could pave the way for a wave of new payments product which utilise blockchain infrastructure and digital assets like stablecoins to make faster and cheaper payments by bypassing traditional fee laden payment rails, and significantly broadening the scope for people to use and spend digital currency in everyday transactions.
Written by S Pettigrove, M Bacina and J Huang
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