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Mastercard charts a path to becoming the metaverse’s default payment network

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The economy of the metaverse is growing, but many netizens still find purchasing virtual items there to be a headache. Through two recent partnerships, Mastercard hopes to address these issues — and set itself up as the default payment network of the virtual world.

Specifically, the partnerships are with Xsolla, a video game commerce company, and Immersve, a web3 payment platform. The first of the two partnerships will allow Mastercard customers to use their reward points for in-game purchases, as well as to send in-game currency to friends and family, among a number of other use cases. The second is intended to allow consumers to spend cryptocurrency directly from their web3 wallets wherever Mastercard is accepted.

Both partnerships are intended to make Mastercard a more seamless tool for virtual commerce opportunities. When considered in tandem, the purpose of Mastercard’s recent run of partnerships is clear: to make Mastercard the electronic payment network for the metaverse.

“I think that’s the next wave that’s coming into the metaverse,” said Xsolla CMO Berkley Egenes. “How do you transact? How do you make purchases? We have brought Mastercard on board to go 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 it is relatively underdeveloped. Roblox has developed a robust creator economy in which developers and brands have made 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 interoperable, or transferable between different platforms. 

“I can have a Roblox account, but I can’t pay for anything in Decentraland. I can have a Metamask account, or I can pick this blockchain or that blockchain,” said Justin Hochberg, CEO of Virtual Brand Group, which sells licensed items from brands such as Forever 21 on Roblox. “There’s 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 gifting in-game currency to friends and family, the lack of parental controls over in-game spending and the risk of fraud or cyberattacks.

“We also did some proprietary research into consumer behavior, which showed that gamers were feeling friction at checkout, and that paying with in-game currency was not easy to do,” Rosenthal said. “Solutions such as Pay with Points were desirable to consumers.”

Mastercard is dipping its toes into the virtual waters at an opportune time. As the recession worsens, brands are beginning to scrutinize the return on investment on their metaverse investments, and tangible revenue opportunities such as 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 the point of business is to get paid.”

Mastercard’s recent virtual payment partnerships represent a step in the right direction, but it will take time for the credit card company to truly ingrain itself into the fabric of the metaverse. For now, neither Xsolla nor Immersve serve the largest metaverse platforms, Fortnite and Roblox. To pave the way for an open metaverse, companies 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 Jerome Faury. “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 on the way.”

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