Visa Cryptocurrency Partners

Crypto Cards Are Giving Bitcoin Purchase Power

Crypto Cards Are Giving Bitcoin Purchase Power
Written by publishing team

Spending your cryptocurrency was once a headache-inducing endeavor. Not only did a few merchants accept bitcoin as a medium of exchange, but without access to the ubiquitous official ramps, you had to look for a buyer willing to exchange the digital currencies. This entailed a degree of risk because peer-to-peer markets protecting users with an escrow system did not exist.

What a difference a few years makes. These days, it’s easy to use bitcoin and ether to buy goods and services online, in the metaverse, and in the meat zone, with payment gateways handling the transfer at the point of sale. The spender authorizes the transaction while the processor converts its crypto into fiat currencies in real time, mitigating the transaction risk for skeptical merchants accepting volatile virtual currencies. Everyone is a winner.

The debit card meets the digital value

Of all the infrastructure put in place since the rise 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 on their extensive networks, giving users access to their crypto wallets and the ability to quickly and inexpensively convert them into fiat currencies for spending purposes.

This is not a universally accepted solution as many countries take a hard line against cryptocurrencies, with financial laws prohibiting citizens from buying, selling or even holding them. A cryptocurrency card, however convenient it may be, will not be of much use in Algeria or Bolivia. But in countries where Visa and Mastercard are accepted, your purchasing power is guaranteed.

Explaining its changing stance towards the digital economy earlier this year, Mastercard wrote that it “is not here to recommend you start using cryptocurrencies. But we are here to empower customers, merchants and businesses to transfer digital value, traditional or crypto, however they want. It should be your choice, It’s your money.”

Mastercard’s growing network of crypto partners now includes the Wirex wallet app, the Bitcoin payment service provider BitPay, the Bakkt digital asset manager, and the FDIC LVL-secured mobile banking app. Last week, the company announced that it has also teamed up with five startups to “solve global blockchain challenges” as part of its Start Path Crypto acceleration programme.

In addition to LVL, companies participating in the program include smart contract builder Ava Labs, AI-based mobile banking app Envel, peer-to-peer savings platform Kash, and crypto rewards platform NiftyKey. Three of the leading cryptocurrency service providers in the Asia Pacific region, Amber, Bitkub and CoinJar, will soon launch Mastercard payment cards funded by cryptocurrency.

Visa has embraced digital assets with similar enthusiasm, partnering with more than 60 crypto platforms including Circle, BlockFi, Coinbase, FTX and Anchorage. The company even launched its global crypto advisory practice last year, targeting financial institutions keen to win or retain clients by expanding their services to include digital currencies, stablecoins, and NFTs.

Much of Visa’s crypto work has been done in coordination with payments startup Simplex, which specializes in providing users with capabilities on and off the platform via both credit and debit cards. Simplex was acquired this year by Canadian payment processor Nuvei in a $250 million deal, and Nuvei is in turn rolling out branded Visa cards to its partners across Europe. It is clear that there are many different entities responsible for giving cryptocurrency more purchasing power.

By enabling millions of consumers around the world to spend digital assets by swiping a card or smartphone, two original non-crypto companies have dealt a surprising blow to the dominance of traditional financial institutions when it comes to payments. The dominance of traditional payment players has waned for some time with the emergence of innovative forms of digital payment. Square’s Cash app has over 40 million monthly active users and digital wallets like Venmo, Revolut and Wirex have also built large international user bases.

Banks are no longer the kings of payment

Many alternative payment platforms continue to allow users to fund their accounts by linking their bank accounts. Crypto-friendly debit cards often display, for example, a cash balance And Crypto balance with account holders who are able to transfer funds accordingly and spend either a legal order or crypto at the point of sale. In the future banks can be completely frozen. Stablecoins, a digital asset pegged 1:1 to the US dollar, are now supported on cards.

Like other cryptocurrencies, stablecoins such as cash can be spent anywhere Visa and Mastercard are accepted with cards such as the one offered by crypto platform Voyager Digital, which supports the USDC stablecoin. If many cryptocurrency users only interact with the old fiat system due to its supposed stability, they can convert their banks to fiat entirely by using assets like USDC and USDT as a type of foreign currency.

Another benefit of stabelcoins is that crypto assets like bitcoin often come with a capital gains tax burden, when converted into cash and spent. Stablecoins are more suitable as a medium of exchange.

Debit cards offered by major native crypto platforms like Coinbase and Crypto.com, all in partnership with Visa, allow users to spend their trading profits (including those obtained from selling NFTs) and earn perks like cashback to inspire loyalty. Crypto.com rewards also include Netflix, Spotify, Amazon Prime, and unlimited airport lounge access, with support for nearly 90 digital assets.

Visa’s various industry partnerships mean that more than $1 billion was 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 totaled $8.8 trillion in payments last year, the number is only rising.

“One thing that is still stopping people from entering the space is the perceived difficulty of crypto spending,” notes Shahav Bar-Geffen, CEO of fintech platform COTI. Directly to your crypto wallet, accepted just about anywhere, is perhaps one of the easiest solutions to a critical adoption issue.”

Unlike many crypto platforms, COTI is designed specifically for payments. The leading COTI Pay product can process all types of payments locally, both online and offline, including crypto and stablecoins, credit cards, and even the merchant’s native currency. However, it has also partnered with Simplex (and by extension, Visa) for its debit cards.

It’s fair to say that crypto-friendly debit cards can offer more functionality than their legal equivalents, which mostly act as payment cards only. In addition to cashback, they often come with referral bonuses, discounts on various services, and even in some cases, lines of credit. The latter feature is being offered by wallet maker Ledger’s new Crypto Life card, which allows holders to obtain credit using cryptocurrency as collateral. While something like this is common in the burgeoning decentralized finance space, it is the first time such infrastructure has been available via a card.

The aptly named Crypto Life card will be available to customers in the UK, France and Germany in the first quarter of 2022, and to US customers in the second quarter, which Ian Rogers, chief experience officer at Ledger, said represents a “step towards replacing traditional bank accounts.” .

The gap between traditional finance and cryptocurrency is closing, and this can only be a good thing for consumers looking to get more bang for their buck. The crypto debit card scene is already crowded with competitors, and we expect franchises to become more attractive and the number of backed digital assets to increase in the coming year.

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