Visa and Mastercard run 'enhanced diligence' on crypto card issuers
November 21, 2020, 1:03PM EST · 3 min read
- The extra checks focus on know your customer and anti-money laundering processes.
- The payments giants are both expanding the services they offer to crypto companies, many of which now offer cards to their customers.
Payments giants Visa and Mastercard run more stringent checks on crypto firms than on other prospective card issuers.
Would-be crypto partners must produce detailed information about their fraud and money laundering checks before being approved to offer cards to their customers.
Cuy Sheffield, Visa’s head of crypto, described the process as “enhanced diligence on top of what we do for typical issuers”.
With a growing number of wallet and exchange businesses launching cards, the crypto sector has become a fresh battlefield for Visa and Mastercard. Both businesses have advertised advancements in the sector in recent months.
In July, London-based wallet provider Wirex became the first native crypto firm to be granted a principal membership license by Mastercard — a development that came not long after the collapse of Wirex’s former payments partner Wirecard. Mastercard said in a press statement at the time that the expansion of its crypto efforts would make it “simpler and faster for partners to bring secure, compliant” cards to market.
Not to be outdone, Visa announced the expansion of its Fast Track programme in November, giving a wider range of fintech firms access to its network of 61 million merchants. Crypto.com and eToro, both UK-based, were identified as crypto partners that had been given the green light.
“Visa is committed to being the preferred network for crypto wallets. Fast Track is really the first step for having an easy way for having a next generation and new wave of issuers to be able to come to us and get card programmes off the ground,” said Sheffield.
Before getting off the ground, however, crypto companies must convince the card networks that the crypto they hold – which they convert into fiat money when a customer tries to pay for something using their card – arrived on their platform from a reputable source.
“They give you a heightened review process which is effectively, ‘I want to see everything you put towards your regulators in terms of anti-money laundering’,” said Mark Hipperson, whose London-based crypto wallet and exchange platform Ziglu recently launched a Mastercard debit card. This includes information on ‘know your customer’, anti-money laundering and fraud checks, as well as transaction monitoring.
Wirex chief executive Pavel Matveev, who has experience working with both Visa and Mastercard, said Visa homes in on individual transactions using tools such as Chainalysis and Elliptic – which Wirex also uses – to ask whether they originate from “legitimate sources”.
“They both [Visa and Mastercard] ask about how we store crypto, what security measures we have in place, what are our screening policies, but it’s fair to say that Visa goes a bit deeper. They even ask about specific cryptocurrency transactions… which was quite surprising for us to be honest,” he said.
A Mastercard spokesperson pointed to principles established in October 2019, which dictate that the company’s crypto partners must provide “strong consumer protection, including privacy and security of the consumers’ information and transactions”.
These principles also require “full compliance with all applicable laws and regulations, including those applicable to anti-money laundering,” according to the company.
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