Spending your cryptocurrency used to be a nerve-wracking endeavor. Not only a few merchants accepted Bitcoin as a medium of exchange, but without access to the now ubiquitous fiat exits, you had to find a buyer willing to exchange fiat for digital one. This came with some risk as there were no peer-to-peer marketplaces protecting users with an escrow system.
What a difference a few years make. Nowadays it’s easy to use Bitcoin and Ether to buy goods and services online, in Metaverse and Meatspace, with payment gateways doing the conversion at the point of sale. The donor authorizes the transaction while the processor converts its crypto to fiat in real time, reducing the risk of the transaction for merchants who are skeptical about accepting volatile virtual currencies. Everyone is a winner.
Debit card meets digital value
Out of all the infrastructure that has been put in place since the advent of the digital asset sector, few have done as much to accelerate mainstream adoption as crypto-friendly debit cards. Payment giants Visa and Mastercard have introduced support for cryptocurrencies across their vast networks, giving users access to their crypto portfolios and the ability to quickly and inexpensively convert them to traditional currencies for spending.
This is not a globally acceptable solution as many countries take a tough stance on cryptocurrencies, with financial laws prohibiting citizens from buying, selling, or even holding them. A crypto fiat card, as practical as it may be, won’t be of much use in Algeria or Bolivia. But in countries that accept Visa and Mastercard, your purchasing power is assured.
Mastercard explained its changing attitudes towards the digital economy earlier this year, writing that it âis not here to recommend that you use cryptocurrencies. But we’re here to enable customers, merchants, and businesses to move digital value, traditional or cryptographic, as they see fit. It should be your decision, it’s your money. “
Mastercard’s growing crypto partner network now includes the wallet application Wirex, the Bitcoin payment service provider BitPay, the digital asset manager Bakkt and the FDIC-insured mobile banking application LVL. Last week, the company announced that it is also partnering with five startups to “solve global blockchain challenges” as part of its Start Path Crypto Accelerator program.
In addition to LVL, the companies participating in the program include the smart contract builder Ava Labs, the AI-centric mobile banking app Envel, the peer-to-peer savings platform Kash and the crypto bonus platform NiftyKey. Three other leading cryptocurrency service providers in the Asia-Pacific region, Amber, Bitkub and CoinJar, will soon launch crypto-funded Mastercard payment cards.
Visa embraced digital assets with equal passion, partnering with over 60 crypto platforms including Circle, BlockFi, Coinbase, FTX and Anchorage. The company even launched its own Global Crypto Advisory Practice last year, aimed at financial institutions looking to win or retain customers by adding digital currencies, stablecoins and NFTs to their services.
Much of Visaâs crypto business was done in partnership with payment startup Simplex, which specializes in providing users with entry and exit options using both credit and debit cards. Simplex was acquired earlier this year by Canadian payment service provider Nuvei for $ 250 million, and Nuvei, in turn, is introducing branded Visa cards for its partners across Europe. There are clearly many different entities that are responsible for giving crypto more purchasing power.
By enabling millions of consumers around the world to spend digital assets with a card or smartphone, two non-crypto-native firms have dealt a shocking blow to the hegemony of traditional financial institutions when it comes to payments. The dominance of traditional players in the payment sector has been waning for some time as innovative forms of digital payment have emerged. Square’s Cash app has more than 40 million monthly active users and digital wallets such as Venmo, Revolut and Wirex have also built large international user bases.
Banks no longer pay kings
Many alternative payment platforms still allow users to fund their accounts by linking their bank accounts. For example, crypto-friendly debit cards often have a fiat balance and Crypto balances with account holders who can move funds accordingly and spend either fiat or crypto at the point of sale. In the future, banks could be completely frozen. Stablecoins, a digital asset whose value is pegged 1: 1 to the US dollar, are now supported on cards.
Like other cryptocurrencies, stablecoins like cash can be issued anywhere that Visa and Mastercard are accepted with cards like the one offered by the Voyager Digital crypto platform that supports the USDC stablecoin. If many crypto users were only interacting with the old fiat system due to its supposed stability, they could switch their banks entirely to fiat using assets like USDC and USDT as a kind of proxy fiat.
There is another benefit to stickcoins in that cryptoassets like Bitcoin often have a capital gains tax burden associated with them when converted into cash and spent. Stablecoins are better suited as a medium of exchange.
The debit cards, offered by major crypto-native platforms like Coinbase and Crypto.com, all in partnership with Visa, allow users to spend their trading profits (including those from the sale of NFTs) and earn perks like cashback to To inspire loyalty. Crypto.com rewards also include free Netflix, Spotify, Amazon Prime, and unlimited access to airport lounges with support for around 90 digital assets.
Visa’s various industry partnerships resulted in over $ 1 billion being spent on its crypto-friendly cards in the first half of 2021 alone. While that’s a drop in the ocean for a company that got $ 8.8 trillion in payments last year, the number is only rising.
“One thing that continues to keep people from entering the room is the perceived difficulty in issuing cryptocurrencies,” notes Shahaf Bar-Geffen, the CEO of the fintech platform COTI, straight into your crypto wallet and is accepted almost everywhere, is probably one of the simplest solutions to a critical acceptance problem. “
In contrast to many crypto platforms, COTI was specially developed for payments. Its flagship product, COTI Pay, can natively process all payment types, both online and offline, including crypto and stablecoins, credit cards, and even a merchant’s native coin. That said, it too has teamed up with Simplex (and thus Visa) for its debit cards.
It’s fair to say that crypto-friendly debit cards can offer more functionality than their fiat equivalents, which for the most part function solely as payment cards. In addition to cashback, they often offer referral bonuses, discounts on various services, and in some cases even lines of credit. The latter feature is offered by wallet maker Ledger’s new Crypto Life card, which allows holders to get loans by using cryptocurrency as collateral. While something like this is common in the burgeoning decentralized finance space, it is the first time that such infrastructure is available through a card.
The aptly named Crypto Life card will be available for customers in the UK, France and Germany in the first quarter of 2022 and for US customers in the second quarter of traditional bank accounts. “
The gap between traditional finance and crypto is closing, and this can only be a good thing for consumers looking to get more for their bitcoins. The crypto debit card landscape is already overflowing with competitors. Expect the perks to get juicier and the number of supported digital assets to increase in the coming year.