Mastercard Says Fewer Crypto Purchases Led To Drop in First Quarter Growth
Mastercard says a decrease in customers purchasing cryptocurrencies resulted in a slight drop in growth in the first quarter of this year.
Mastercard’s quarterly growth was marked by a slight drop due to a decrease in the number of customers purchasing cryptocurrencies with the company’s credit cards, CNBC reported May 3.
Consumers can use Mastercard to acquire digital currencies, a practice forbidden by some financial institutions. Earlier this year, Bank of America, JPMorgan Chase, and Citigroup prohibited such purchases, referring to potential credit risks and cryptocurrency volatility.
Mastercard’s cross-border volumes reportedly grew by 19 percent, though that figure dropped by 2 percentage points from the fourth quarter, partly due to fewer purchases of cryptocurrencies by their cardholders.
Mastercard chief financial officer Martina Hund-Mejean said one reason was “the recent drop-off in crypto wallet funding," although according to her, the company is expecting international growth to moderate. Mastercard CEO Ajay Banga highlighted uncertainty in Asia, saying some exchanges are pulling back in South Korea, while others in Japan have security concerns:
"There's a lot of concerns even in Japan because one of their biggest exchanges got hacked. As you can see, right now there's a little less interest than there was in the latter part of the fourth quarter and the first quarter."
He further stated that digital currency is not a major part of their corporate strategy because it’s hard to predict how the sector will develop:
"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."
Despite the slight dip in growth, Mastercard stock went up more than three percent on Wednesday after their reported first quarter profits beat Wall Street expectations. At press time their shares were trading at $186.48.
In October last year, Banga was vocally opposed to digital currency that was not backed by a government. “If the government creates digital currency, we will find a way to be in the game. We will provide rails for moving currency from customer to merchant. The government mandated digital currencies are interesting. Non-government mandated currency is junk,” he said.