Mastercard Partners With Ripple to Explore Stablecoin Settlement for Faster Card Payments

Mastercard and Ripple, a fintech that designs cryptocurrency solutions for businesses, have joined forces with Gemini and WebBank to look into the use of Ripple’s stablecoin, RLUSD, on a public blockchain, the XRP Ledger, to allow for stablecoin settlement of credit card payments, according to a press release. 

The announcement may lead to significant changes in the credit card industry, as the companies’ efforts stand to allow for faster settlement of card payments. In general, the settlement of a credit card payment takes between one and three business days via traditional methods.

WebBank is the issuer of Gemini’s credit card, and the two companies, in collaboration with Mastercard and Ripple, aim to enable Ripple’s stablecoin to support blockchain-based settlements between the issuer and Mastercard. 

“Through our partnerships with Ripple, Gemini, and WebBank, we’re using our global payments network to bring regulated, open-loop stablecoin payments into the financial mainstream,” Sherri Haymond, Global Head of Digital Commercialization at Mastercard, explained in the release.

Upon implementation, the effort will be one of the first instances of a partnership that sees a regulated bank in the U.S. use a regulated stablecoin on a public blockchain to settle credit card transactions, according to the release.

Haymond added that the partnership between the companies also will examine how stablecoins can support more use cases down the road.

President Donald Trump signed the GENIUS Act into law over the summer, opening the door for digital currencies to make more of an impact on the credit card ecosystem.

Mastercard hasn’t been shy about dipping its toes into the stablecoin waters. In addition to its partnership with Ripple, the company has also been having conversations to purchase stablecoin company Zerohash, according to a recent report.

That acquisition won’t be cheap, as Fortune reports that buying the startup could cost Mastercard between $1.5 and $2 billion.

Ripple has been involved in big-money deals of its own this fall. The company recently raised $500 million in a funding round that it plans to invest in the support of its product lineup and to further its relationships with financial institutions.

Mastercard is reportedly considering purchasing Zerohash at a price tag north of $1.5 billion.

Issuers may have more than a few concerns about amending their processes to incorporate stablecoin solutions. But when respected leaders in the payment space such as Mastercard are involved in vetting new stablecoin use cases, issuers can gain confidence that the resulting solutions will be secure and function efficiently. 

Blockchain-based settlement not only allows payments to process faster than through traditional routes, but it may also position issuers to save on labor costs if it allows them to cut down on time spent reconciling payment data and managing disputes.

“Financial institutions around the world are increasingly recognizing the value of blockchain and stablecoins in modernizing how money moves,” Monica Long, President of Ripple, said in the release.