Mastercard paves the way to become the metaverse’s default payment processor

The metaverse economy is growing, but many internet users still find buying virtual items a headache. Through two recent partnerships, Mastercard hopes to solve these problems and establish itself as the virtual world’s default payment processor.

More specifically, the partnerships are with xsollaa video game trading company, and Immersion, a web3 payment platform. The purpose of the first of the two partnerships is to allow Mastercard customers to use their rewards points for in-game purchases, as well as send in-game currency to friends and family. The second is intended to allow consumers to spend cryptocurrency directly from their Web3 wallets anywhere Mastercard is accepted.

Both partnerships aim to make Mastercard a more transparent tool for virtual commerce opportunities. Considered in tandem, the goal of Mastercard’s recent series of partnerships is clear: to make Mastercard the electronic payment provider for the metaverse.

“I think this is the next wave coming into the metaverse,” said Xsolla CMO Berkley Egenes. “How do you deal? How do you shop? We used Mastercard to do this.

Virtual commerce is one of the most promising aspects of the metaverse for brands and creators. But at the moment the infrastructure for this is relatively underdeveloped. Roblox has developed a robust creator economy in which developers and brands have earned millions of dollars selling virtual items, but other popular metaverse platforms such as Fortnite and Minecraft lack similar features. And virtual items and currency are rarely interoperableor transferable between different platforms.

“I can have a Roblox account, but I can’t pay anything to Decentraland. I can have a Metamask account, or I can choose this blockchain or this blockchain,” said Justin Hochberg, CEO of Virtual Brand Group, which sells items. licensed from brands like Forever 21 on Roblox “There’s no interoperability.”

In an interview with Digiday, Mastercard evp of fintech solutions Blake Rosenthal listed three specific issues with the current state of in-game purchases that prompted his company to partner with Xsolla: the difficulty of giving in-game currency to friends and family, lack of parental control over in-game spending, and risk of fraud or cyberattacks.

“We also conducted proprietary consumer behavior research, which showed that players experience friction at checkout and that paying with in-game currency is not easy to do,” Rosenthal said. “Solutions such as Pay with Points were desirable for consumers.”

Mastercard dips its toes in virtual waters at the right time. As the recession deepens, brands are beginning to scrutinize the ROI of their investments in the metaverse, and tangible income opportunities such as virtual commerce are key to proving the value of these spaces.

“If you don’t have a payment strategy, why are you in business? said Hochberg. “Because the purpose of business is to get paid.”

Mastercard’s recent virtual payment partnerships are a step in the right direction, but it will take time for the credit card company to truly anchor itself in the fabric of the metaverse. As of now, neither Xsolla nor Immersve serve the biggest metaverse platforms, Fortnite and Roblox. To pave the way for a open metaversecompanies like Xsolla and Immersve will have to convince these platforms and many others to use the infrastructure they are currently building.

“I don’t think you can have a sustainable business doing this stuff right now because you don’t have the critical mass,” said Immersve CEO Jérôme Faury. “The day-to-day experience will be web3 payout, and then it will evolve into this more metaverse experience, with some proof-of-concept and fun stuff along the way.”

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