By Ray Birch
TAMPA, Fla.—Are cryptocurrency debit cards the means through which decentralized digital currencies move mainstream?
One payments analyst—once a Bitcoin skeptic—now believes that’s possible.
“I have always thought that Bitcoin was a speculator thing, not something to be taken seriously,” said Lou Grilli, director of payments strategy at CSCU. “But as I got more involved in this topic I began to rethink my position, because if Visa is willing to treat this as legitimate payments source—cryptocurrency debit cards—then maybe this is something to keep my eye on.”
“Does this open Bitcoin to the masses?” continued Grilli. “You have this plastic card that now sits in your wallet, not something that sits in the cloud. This is a potential game changer—we will see.”
Big Hurdle
One major hurdle in the way of blockchain-backed currencies, such as Bitcoin, is that they are not as readily usable as standard forms of payment, such as cash and cards.
Cryptocurrency debit cards give users the freedom to pay in virtual currency just like any normal transaction. Nasdaq has issued a statement that suggested the ability to use cryptocurrencies for transactions “in our day-to-day lives-directly without pre-conversion into fiat-at regular stores, restaurants, or gas stations-can be the tipping point that merges the crypto and real world.”
Cryptocurrency debit cards function like clones of fiat debit cards in terms of simplicity, ease of use and acceptance. The payments are carried out in collaboration with a payment gateway (Visa or Mastercard).
All that said, however, Grilli said he is still stuck finding reasons for widespread usage of crypto debit cards.
“So I began looking for some of these cards and I came across the Shift Card. It is offered by Coinbase, which is U.S.-based, so verification must be done. They are adhering to AML and KYC compliance. They charge fees—$2.50 for each ATM transaction and a hefty 3% charge for foreign exchanges. So, using these for international travel? Why not just get a credit card that does not charge foreign exchange fees? But maybe people see these as a backup card when traveling overseas, much like travelers checks in the old days.”
Lou Grilli
Grilli said he found crypto debit cards offered outside the U.S., which offer user anonymity, don’t require verification information and don’t follow compliance guidelines. He suspects those crypto debit cards would make it easier for hackers who demand ransom money to anonymously spend their take.
“There are a couple of these cards, like Crytopay.me,” Grilli said. “As long as there are cards out there that allow Bitcoin to be used anonymously, that makes Bitcoin a useful tool for bad guys, and I’d like to see that tool taken away.”
Something Tangible
But the real appeal to consumers, reiterated Grilli, is just being able to hold something in hand that represents Bitcoin holdings.
“Seems to me, from what I know and have read, there is a comfort in holding a card,” he said. “If I have this card I know I can easily get at my Bitcoin funds, rather than thinking I have to go through some convoluted process of requesting my money…”
But there is some “fallacy” in that feeling of comfort the plastic provides, Grilli added.
“Bitcoin is a volatile currency. The amount you have can nosedive, or grow. And there are Bitcoin exchanges that have suffered from embezzlement. If your cryptocurrency goes away, you can’t file with the CFPB.”
That said, Grilli stills believes cryptocurrency plastic could change the horizon for Bitcoin and digital currencies, which could impact card issuers.
“Now I keep my money in my Bitcoin exchange account and then I draw directly from that with my card and skip that whole middle thing—which by the way that middle thing means interchange for issuers,” Grilli said.