Mastercard shows a way to become the metaverse’s default payment processor
The economy of the metaverse is growing, but many netizens still find buying virtual items there a headache. Through two recent partnerships, Mastercard hopes to address these issues — and establish itself as the virtual world’s default payment processor.
Notably, the partnerships are with Xsolla, a video game trading company, and Immersve, 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 aims to allow consumers to spend cryptocurrency directly from their Web3 wallets wherever Mastercard is accepted.
Both partnerships aim to make Mastercard a more seamless tool for virtual trading opportunities. Taken together, the purpose of Mastercard’s recent partnerships is clear: to make Mastercard the electronic payment provider for the Metaverse.
“I think that’s the next wave that’s coming into the Metaverse,” said Berkley Egenes, CMO of Xsolla. “How do you act? How do you shop? That’s why we brought Mastercard on board.”
Virtual commerce is one of the most promising aspects of the metaverse for brands and developers. But at the moment the infrastructure for this is still relatively underdeveloped. Roblox has developed a robust creator economy where developers and brands have made millions of dollars selling virtual items, but other popular Metaverse platforms like Fortnite and Minecraft lack similar features. And virtual items and currencies are rarely interoperable or transferrable between different platforms.
“I can have a Roblox account but I can’t pay anything in Decentraland. I can have a metamask account or choose this blockchain or that blockchain,” said Justin Hochberg, CEO of Virtual Brand Group, which sells licensed merchandise from brands like Forever 21 on Roblox. “There is no interoperability.”
In an interview with Digiday, Mastercard evp of fintech solutions Blake Rosenthal listed three specific pain points in the current state of in-game purchases that motivated her company to partner with Xsolla: the difficulty of getting in-game currency to friends and family give away, the lack of parental control over in-game spending, and the risk of fraud or cyberattacks.
“We also did some of our own consumer behavior research, which showed that players experienced friction at checkout and that paying with in-game currency wasn’t easy,” Rosenthal said. “Solutions like Pay with Points were desirable to consumers.”
Mastercard is diving into the virtual waters at an opportune time. As the recession deepens, brands are beginning to question the ROI of their Metaverse investments, and tangible revenue opportunities like virtual commerce are key to proving the value of these spaces.
“If you don’t have a payment strategy, then why are you in business?” Hochberg said. “Because business is about getting paid.”
The latest from Mastercard virtual payment partnerships are a step in the right direction, but it will take some time for the credit card company to really dig into the fabric of the metaverse. Currently, neither Xsolla nor Immersve serves the largest Metaverse platforms, Fortnite and Roblox. To pave the way for an open metaverse, companies like Xsolla and Immersve must convince these platforms and many others to use the infrastructure they are building.
“I don’t think you can run a sustainable business with these things right now because you don’t have the critical mass,” said Jerome Faury, CEO of Immersve. “The everyday experience will be the Web3 payment, and then it will evolve into this more metaverse experience, with some proofs of concept and fun stuff along the way.”