Popular decentralized finance (DeFi) wallet MetaMask has partnered with Mastercard and digital payments company Baanx to launch a self-custody debit card pilot program for select users in the United Kingdom and the European Union, with plans to roll out the product in other regions over time.
The card allows users to self-custody their funds until the moment the transaction is processed and the customer’s digital assets are converted into fiat for payment at retail outlets, online shopping outlets and other merchants.
How it all works
In a statement to Cointelegraph, Lorenzo Santos, senior product manager at Consensys, explained that users need to hold their crypto on the Linea network and use Linea to set spending limits on the card.
Santos also outlined how transactions would be processed from start to finish. According to the Consensys executive, when a MetaMask card is swiped, an onchain transaction is created, sending tokens from the user’s wallet to the “Crypto Life” smart contract. This allows the transaction to be authorized by the point-of-sale system used by the merchant accepting the card, and the conversion from crypto to fiat is handled by this smart contract. Finally, the payment is finalized over Mastercard’s payment network.
Customers will also have the option of choosing which crypto asset will be used for payment. Users will also have the choice of where they store their keys.
Related: Addressing crypto debit card adoption challenges: Interview with Baanx
Banking the unbanked
While the new MetaMask pilot is currently restricted to the European markets, initiatives like this can potentially bring banking services to the world’s unbanked population and streamline crypto payments for individuals living in high inflationary environments. Simon Jones, chief commercial officer of Baanx, told Cointelegraph:
“With 1.2 billion people in the world officially unbanked, we are working towards a vision whereby anybody with a mobile phone can access financial services. Using new technologies, financial inclusion for all is our goal.”
The head of Nigeria’s Securities and Exchange Commission, Emomotimi Agama, recently noted the potential for digital assets to extend banking services to the country’s 38 million unbanked adults.
According to Chainalysis, cryptocurrencies accounted for 9% of the $5.4 billion in remittances sent to Venezuela in 2023. The percentage of remittances sent to the South American nation has grown every year since 2018, except for 2020 — the year COVID-19 caused widespread discrepancies across financial reporting figures.
Argentina is another example, where the population is turning to crypto assets to sidestep the staggering 276% inflation rate afflicting their local currency.
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