On Feb. 19, Coinbase announced that it has become a principal member of Visa. In an apparent first for the cryptocurrency industry, the firm is now able to issue debit cards without having to involve third parties. Prior to that, Coinbase had been releasing its physical cards in collaboration with authorized intermediaries, similarly to dozens of other crypto companies that offer such options to their clients.
While Coinbase didn’t share its strategy, technically, the new status grants it the possibility to issue cards to fellow cryptocurrency firms. In any case, this development marks an important milestone for the crypto payments sector.
Seamless and instant: A brief introduction to crypto cards
Cryptocurrency cards are in many ways similar to conventional bank cards used by millions of people around the globe for day-to-day purchases. The main difference is that the former allows users to deposit and convert cryptocurrencies instead of fiat money.
So, what makes them comparable? Crypto cards also leverage the existing Visa/Mastercard infrastructure widely used across the world, thereby enabling its holders to pay in crypto for any product or service that can be purchased via a cashless payment, either in-store or online. To achieve that, crypto card-issuing companies either convert digital assets seamlessly for each payment (debit cards) or enable the user to transfer them into a dedicated fiat account, which can, in turn, be used for day-to-day purchases (prepaid cards).
That breaks one of the largest barriers to widespread cryptocurrency adoption. Most merchants are still reluctant to accept crypto due to a variety of reasons including the general stigma that is still attached to digital assets, while many cryptocurrencies continue to face scalability issues that drastically hinder their performance capabilities.
Moreover, many exchanges offer only crypto-to-crypto trading possibilities, and converting tokens to fiat is still a complicated and often lengthy process. Crypto debit cards, meanwhile, present a convenient middle ground for both merchants and holders: The former are not required to update their payment infrastructure while the latter don’t have to manually convert their crypto savings each time they buy a cup of coffee. Read More