Dive Brief:
- Mastercard has agreed to purchase London-based stablecoin infrastructure startup BVNK for up to $1.8 billion, with $300 million contingent on meeting certain goals, according to a press release Tuesday from the card company.
- The card network envisions using BVNK, which is connected to most major blockchain networks, to build a bridge between stablecoin and fiat currencies, the release said. In addition, Mastercard sees BVNK ultimately enabling faster settlements even for card rails, Mastercard Chief Product Officer Jorn Lambert said on a webcast with analysts Tuesday.
- “We expect that most financial institutions and fintechs will in time provide digital currency services,” Lambert said in the release. “Adding on-chain rails to our network will support speed and programmability for virtually every type of transaction.”
Dive Insight:
London-based BVNK is a business-to-business service provider, making its blockchain technology available to financial institutions, fintechs and other payments players. Its network reaches into 130 countries, and it’s agnostic with respect to which major blockchains it works with, tapping Circle and PayPal stablecoins, among others, to move digital currencies.
BVNK was founded in 2021 and has raised $90 million. Its international footprint includes operations across the U.K., U.S., Europe and Africa, with outposts in San Francisco and New York.
The business provides stablecoin services for a host of uses, including aiding fintechs in launching stablecoins; assisting companies in paying international employees’ and supporting companies in accepting crypto deposits for trading and gaming.
Though the digital currency industry may be “nascent” today, it’s scaling quickly, Mastercard said in the release, pointing to $350 billion in payments volume last year, according to the research firm Boston Consulting Group.
Lambert noted the stablecoin market has varying regulatory structures around the world that are still developing in many countries. He suggested Mastercard’s experience with bank regulations and existing bank ties will benefit the BVNK business.
“It is a competitive advantage in the sense that we want to serve banks, regulated banks that have a very, very high degree of scrutiny around that,” he said on the webcast.
While stablecoin payments have been seen as a potential competitive threat to the card networks, Lambert painted stablecoins as a means to buttress Mastercard’s business. On the webcast Tuesday, he pointed to “significant benefits to accelerate the settlement, even for the card network.”
Mastercard is the second-largest U.S. card network, behind Visa, which has also delved into the stablecoin sphere, pitching cross-border payment services and stablecoin advisory services.
From its perspective, BVNK’s management is counting on benefiting from Mastercard’s relationships with financial institutions and its experience in working with regulators, BVNK co-founder and CEO Jesse Hemson Struthers said in a Tuesday blog post. The blockchain technology company said it processes $30 billion in payments annually.
“BVNK will power stablecoin capabilities across Mastercard’s payment endpoints; enabling 24/7 stablecoin settlement for processors and acquirers; and adding stablecoin checkout to Mastercard’s payment gateway ... while Mastercard provides BVNK with global fiat infrastructure (push-to-card, account, wallet),” the blog post said.
Struthers sought to assure BVNK customers that their services won’t be interrupted by the Mastercard transaction as the two companies seek regulatory approvals for the deal. They expect to close the transaction by the end of the year.
