Crypto-Banning Banks Impact Mastercard Q1 Volume

The crypto-banning big banks are creating a negative impact on cross-border payments and transaction volume for Mastercard.

According to a recent earnings call reported by Seeking Alpha, the restrictions on crypto-currency by mega-issuing banks including JPMorgan Chase, Bank of America, Bank of Montreal, Capital One and Citi has led to a decline in Mastercard’s cross-border transaction volume for Q1.

Mastercard CFO Martina Hund-Mejean reported “the company’s cross-border payments volume rose 19 percent during the first part of 2018 overall. However, volume was down 2% compared to the Q4-2017 “in part due to the drop [in] crypto wallet funding.”

She further explained, “so the issue in this, first of all, in terms of the stacks, on the cross-border volume growth, the cryptocurrency funding or the crypto wallet funding really was 1 percent. It was 1 percent that we saw in the fourth quarter and it was 1 percent that we saw in the first quarter. What the issue is that a number of the banks have decided, in particular in the United States, that they would not allow the usage of cards for this particular funding vehicle. And that’s why we have already seen a relatively significant decrease of the volume related to that event.”

According to Mastercard’s CEO Ajay Banga, “new restrictions and uncertainty around exchanges have also helped lead to the decline in volume.” Also, falling interest levels in the market have also not helped, he continued, saying “right now there’s a little less interest than there was in the latter part of the fourth quarter and the first quarter.”

Banga went on to say, “Mastercard is not interested in counting cryptocurrencies as part of its earnings projections. We actually said that this is not something we count on because we just don’t know how to predict it or we don’t even want to count it.”