Australian web3 startup Immersve has a new Mastercard offer that allows users in Australia and New Zealand to pay with cryptocurrency using their Immersve Mastercard anywhere they see a Mastercard sign. Crypto cards are no longer a novelty. However, the distinctive feature of Immersve is that cryptocurrencies can be in a self-hosted wallet instead of being held on a cryptocurrency exchange.

To date, Mastercard and Visa’s offerings for crypto payments have invariably been tied to an exchange or company that custodies the cryptocurrency.

There was already a move to allow users to upload or download fiat currency from crypto wallets directly, without going through an exchange. That accelerated with the FTX collapse.

With the Immersve card, payments can be made offline or online and for real goods or in the metaverse.

How does it work?

In addition to entering the Mastercard details for the payment, the user must approve the transaction in the self-hosted wallet using their private key. Therefore, it involves a two-step process. By contrast, most crypto cards with crypto escrow only involve swiping the card for payment. Those who wish to use a self-hosted wallet are likely to be fine with this small inconvenience.

Immersve is partnering with a third-party settlement provider and clients will use the USDC stablecoin for payments that will be converted to fiat currency and settled through the Mastercard network.

What is not clear from the announcement is whether a user can pay with ETH or some other crypto. We assume they can, but we didn’t get a response from Immserve in time for publication. Most crypto cards involve the user paying with ETH or another cryptocurrency that is converted into a stablecoin by the cryptocurrency exchange, and that stablecoin is used for payment.

In the case of a self-hosted wallet, the question is whether a user can use any cryptocurrency and how it is converted to USDC. Is that conversion done through a centralized exchange or a decentralized exchange? We assume that the crypto is transferred to a centralized operator, converted to USDC, and then used for payment. This reduces any potential risk for the crypto holder to just the payment amount for a short period.

The solution supports KYC/AML and online fraud detection using Mastercard solutions such as CipherTrace. Mastercard launched its Crypto Secure service in October 2022.

“In the last three years, the number of people using blockchain-based wallets has doubled to more than 80 million. Looking ahead, digital wallets are likely to become as ubiquitous as email addresses,” said Sandeep Malhotra, Executive Vice President of Products and Innovation for Mastercard Asia Pacific.

“As Web2 and Web3 increasingly converge, Mastercard remains committed to partnering with like-minded organizations like Immersve to scale and secure the blockchain ecosystem for simple and secure cryptocurrency transactions and even payments in the metaverse, easily accessible to billions of consumers.