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Move over, airline miles and hotel bookings. Cryptocurrency is the new credit card reward.
Mastercard, one of the largest credit card networks in the U.S., said Monday it has partnered with Bakkt, a platform to buy and sell digital assets, to make it easier for merchants, banks and financial-technology firms to integrate cryptocurrency into their products and services.
Customers will be able to buy, sell and hold digital assets through custodial wallets, and Mastercard partners will be able to offer cryptocurrency as rewards, according to a press release. The credit card company didn't specify which cryptos would be allowed on its network, but CNBC, which first reported the news, reported that the crypto integration includes bitcoin wallets and loyalty programs where airline and hotel points can be converted into bitcoin.
Financial institutions are jumping on the crypto train, trying to establish their place in a space that continues to grow. Bitcoin, the most well-known crypto, recently hit an all-time price high of more than $66,000 per coin, and U.S. investors just got the closest thing so far to a bitcoin exchange-traded fund (ETF) or mutual fund when the first bitcoin futures ETF came to the market.
Mastercard rival Visa offers crypto-linked cards, and Visa says customers spent more than $1 billion with these cards in the first half of 2021. American Express invested in a cryptocurrency trading platform in late 2020. Meanwhile, payment platforms like Venmo and Cash App now allow customers to buy and sell bitcoin and other cryptos on their platforms.
Mastercard also already offers some credit and debit cards that allow customers to convert and earn cryptocurrency through partnerships with companies like BitPay and Gemini. The credit card company announced in February that it was preparing to support cryptocurrencies directly on its network.
While some companies, like Microsoft and AT&T, accept bitcoin payments, you still can't make most of your purchases with the digital asset. The partnership between Mastercard and Bakkt comes as consumers seek out crypto as a way to pay for everyday purchases, Mastercard said via the release.
Bear in mind that there are risks. While more customers can now convert or receive reward points in cryptocurrency, it's important to understand that cryptocurrency is backed by relatively new technology and isn't regulated by a third party in the way U.S. dollars and other currencies are.
Crypto is also a volatile asset, with huge price swings. Just look at this past April, when bitcoin hit a high of nearly $65,000 before the price dropped more than 50% by July.