As cryptocurrencies continue to grow in popularity, we are seeing a much needed uptick in companies looking to service the sector. While cryptocurrencies offer many different capabilities, there is one implementation that will always be at the forefront – merchant spending. This means providing the general public with the ability to support their daily spending habits with the use of cryptocurrencies.
The day that a customer can use their cryptocurrency holdings at a gas-station, no different than a debit card, will be an important day for the sector. Thankfully, it is a day that is coming soon.
Crypto Debit Cards
A crypto debit-card is exactly what its name implies – a debit card which allows for the user to make everyday purchases with their cryptocurrency holdings. To achieve this, companies are typically forced to partner with existing payment processors, tapping into existing infrastructure. For most of the crypto debit-cards announced to date, Visa has become this partner of choice.
If the idea of a crypto debit-card sounds like a fantastic step forward, temper your expectations. While the launch of such cards does indeed demonstrate forward momentum in crypto, most will not function as expected.
While cardholders will be able to draw upon their cryptocurrency holdings to fund a purchase, merchants will not be accepting cryptocurrencies. Rather, these partnerships with Visa will see the payment processor convert cryptocurrencies to FIAT at merchant point-of-sales.
Ideally, as merchants see more and more customers paying through such means, and become more comfortable with digital assets, they will one day support full integration.
Now that we’ve established what a crypto debit-card is, and some of the associated pros/cons, when can we look forward to using them?
Dating back multiple years now, various companies have done their best to develop such a card. Most pioneers behind the idea, however, were stymied by regulations and market immaturity. This has changed in 2020, though, with various high-profile companies having announced the imminent launch of their own iterations. Each of the following cards are expected to launch in the coming months, within the United States, and various countries around the world.
As one of the largest names associated with crypto, any offering by Coinbase is highly anticipated. For its foray into crypto based debit cards, Coinbase has announced ‘Coinbase Card’. The card, which has been available outside of the United States for a little while now, will soon make its first appearance within U.S. borders.
Coinbase has gone one step further than just supporting crypto spending. It has announced that its card will also offer reward features, which will provides its users with 4% back in Steller or 1% back in Bitcoin.
This is the most recently announced crypto debit-card listed here today. The card, which was made possible through a collaboration between Paxful and Ternio, was developed with the goal of ‘banking the unbanked’. Paxful specifically notes data collected by the World Bank – which indicates 1.7billion humans globally are unbanked – as its motive behind the endeavour.
Daneil Gouldman, CEO of Ternio, states, “Paxful is a best in class peer to peer bitcoin marketplace, so we’re pumped up about being able to provide their customers access to the BlockCard platform…It’s going to be fun to pair together all of the strengths of Paxful with Blockcard’s global debit card and bank account capabilities. Ternio is committed to providing interoperability between cryptocurrencies and the traditional banking system.”
While the above offerings share various similarities, BlockFi’s offering differs slightly. Rather than allowing a customer to make purchases with cryptocurrencies, it has partnered with Visa to develop one of the first cryptocurrency reward cards.
This means that when making typical debit purchases, the cardholder will be able to receive supported cryptocurrencies, similar to how they would receive loyalty points, such as air miles or ‘cashback’.
Actual spending will still draw upon cardholder balances of FIAT currencies only. With other offerings providing the capability to receive crypto rewards, in addition to spending, it should be interesting to see if the structuring of BlockFi’s card changes upon launch.
The Verdict is Still Out
The provided examples of crypto debit-cards are only a few of many planned. With very little having gone live yet, the verdict is still out on whether these cards will be successful. Are customers interested in rewards cards only? A combination of the both? Or are they not interested at all?
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