Mastercard's Stablecoin Push Accelerates Cross-Border Payments

Mastercard has made significant strides in embracing stablecoins over the past five years. The payment service company views stablecoins as a key component of its cross-border disbursements, treasury operations, and merchant payouts.

Stablecoins are cryptocurrencies pegged to a stable fiat currency, such as the U.S. dollar or the Euro. They're usually backed by cash and Treasuries, can be held without a bank account, and facilitate faster, cheaper settlements than conventional bank transfers.

In 2021, Mastercard joined a pilot program with Circle's USD Coin (USDC) stablecoin to test its use for settling financial transactions. Since then, it has launched a full suite of stablecoin settlement tools, launched crypto-linked cards, and facilitated on-chain remittances.

Mastercard's expansion into stablecoins may generate tailwinds for Circle, which mints those stablecoins. Most of Circle's revenue comes from the interest it collects on the cash and Treasury holdings backing its own stablecoins, and that reserve income will rise as it mints more tokens.