Mastercard Moves Deeper into Stablecoins Via Its BVNK Deal

Mastercard Inc. announced early Tuesday it has agreed to pay $1.8 billion to acquire BVNK, a London-based stablecoin platform. The deal comes amid growing interest in stablecoins among fintechs, banks, and payments providers and as payments networks increasingly view the cryptocurrency as a practical vehicle for overall growth.

The transaction, which includes $300 million in what Mastercard calls contingent payments, also comes as the network, along with its rival, Visa Inc., have for years been building a variety of cryptocurrency capabilities while the focus of the card companies’ products has remained on moving fiat money. Now, that focus is shifting to the potential for stablecoins to move money faster and with high reliability.

“Digital currencies have moved beyond crypto trading strategies,” said Jorn Lambert, Mastercard’s chief product officer, during a conference call to discuss the BVNK deal. “There are now more use cases, more participants, twenty-four seven availability, borderless transfers, and global settlement.” With these features, stablecoins offer tangible value, he said, adding to the case for payments networks to support transactions that rely on them.

Lambert particularly cited advantages stemming from stablecoins in cross-border transactions as well as domestic peer-to-peer payments. Meanwhile, management by a network like Mastercard, he said, can offer reliable and tested money-movement technology to an industry that has emerged only in recent years. “The level of fragmentation [in cryptocurrency payments] multiplies,” he said. “There are multiple chains, and this complexity will only increase, which creates a need for a secure, reliable, and predictable transaction experience.”

BVNK’s appeal lies in its experience as well as in its technology, according to Lambert. The company, founded only in 2021, has been operating as a money-services business in the U.S. market and holds “multiple licenses,” he said. Building that technology “would require quite a bit of time,” Lambert added, “acquiring it is faster to market. It’s very difficult to build fast.”

But while Mastercard is optimistic about the deal, it is not disclosing financial projections related to its operations through BVNK. The London company offers send, receive, currency-conversion, and storage capabilities, “and there is opportunity to price for that,” Lambert told equity analysts on the call as he described how the deal could add to Mastercard’s business in payments orchestration, or the management of payments involving multiple currencies. “There’s incremental value for our customers and our investors,” he said.

Some of that value will stem from the faster settlement platforms like BVNK make possible. Now, with cards, “we need to settle on fiat ACH rails. That takes a little while, one or two days” Lambert said, referring to the automated clearing house network. “With stablecoins, we can accelerate settlement, we can move funds faster.” That makes the acquisition of BVNK “a net additive deal for the [Mastercard] network, not a replacement.”

But some observers see another motive behind the deal. “I see this as enabling Mastercard to settle card transactions over stablecoins, preserving its own position at the expense of its issuers,” says Aaron McPherson, principal at AFM Consulting LLC.

However the strategic logic behind the deal plays out, Mastercard in the short term clearly sees revenue opportunity in the BVNK deal from providing services such as send, receive, storage, and conversion to fiat. “There is an opportunity to price for that,” Lambert noted.