Mastercard has announced a pilot program in partnership with Circle’s USDC stablecoin and others to enable cardholders to pay merchants using cryptocurrency anywhere Mastercard is accepted, according to a company press release.

Fast facts

  • USDC will act as an intermediary between fiat and other cryptocurrencies in the new system, allowing all merchants to offer card services to crypto holders while transacting only in fiat themselves. Although it may seem inefficient to convert all currencies in the transaction to USDC, it is easier for many tokens to convert to the stablecoin than it is directly to fiat.
  • A stablecoin is a cryptocurrency which is pegged to an underlying asset — in USDC’s case, the U.S. dollar — with the promise of reimbursement at any point at a rate of 1:1 to that asset. Because of that relationship, USDC’s price rarely fluctuates beyond US$1. This is why stablecoins are useful intermediaries between fiat and other cryptocurrencies.
  • Only yesterday, Circle revealed the exact breakdown of what backs USDC, with “cash or cash equivalents” making up 61% of the coin’s backing. The remainder was comprised of a combination of certificates of deposit from non-U.S. banks at 13%, U.S. treasuries at 12%, commercial paper accounts at 9%, and municipal and corporate bonds making up the remainder.
  • Raj Dhamodharan, executive vice president of digital asset and blockchain products and partnerships at Mastercard, said in a statement: “Today not all crypto companies have the foundational infrastructure to convert cryptocurrency to traditional fiat currency, and we’re making it easier.”