How do crypto cards work?
What are credit cards that are based on a cryptocurrency-fed account? Can we use them everywhere? How are they different from traditional credit cards?
It is common to think that it is cryptocurrenciescryptocurrencies primarily used for speculation. However, the primary utility of currency is still that it can pay, buy goods. What about cryptocurrency? For years, various websites have accepted payment BitcoinBitcoinincluding Expedia, Subway, Twitch or MicrosoftMicrosoft. And sure barsbars or shops accept this type of payment – the list of French brands is regularly updated on this page: https://bitcoin.fr/depenser-ses-bitcoins/. What is less known is that there are crypto-cards similar to regular credit cards.
The demand for crypto cards came from users of the exchange platform Coinbase who wanted to use their funds in their daily lives. To meet this demand, Coinbase therefore launched the card in the United Kingdom in April 2019. Then in June 2019, this card became available in the United States, France, Spain, Italy, Ireland, Germany and even the Netherlands …) Now there are many providers that offer such crypto-cards: Binance, Curve, Crypto.com, CryptoPay…
Crypto cards accepted at almost all points of sale
Similar to the classic card, the crypto-card is accepted at almost all points of sale in the world. It also allows you to withdraw euros from any ATM. It can also be used for payments mobile phonesmobile phones (AppleApple pay, GoogleGoogle pay). The essential difference is that the account related to the crypto-card, instead of being funded in euros, is in a currency such as Ethereum, Bitcoin, BNB, CRO and others avataravatar.
How does it work in practice? Let’s say you walk into a bookstore, pick out a few books, and then go to the checkout. Let’s say you made a purchase worth 100 euros.
You take the card given to you by Binance from your pocket to make the payment. Insert it into the terminal and enter your PIN code. A debit of 0.03 ETH (Ethereum) is made to your Binance account – equivalent to €100 at the time of writing. Binance converts this amount of 0.03 ETH into 100 euros which is paid to the trader through crypto processing. Note that other crypto-cards, especially Crypto.com, work in “prepaid” mode: it is necessary to replenish the balance in euros in advance by selling cryptocurrencies upstream.
Visa and Mastercard support
One factor can convince crypto-card users: they are backed by Visa or Mastercard. It just so happens that these institutions want to support the digital transformation of financial services. Visa also made it known that during 1er semester 2021, costs incurred over crypto-cards backed by his brand have reached $1 billion.
Advantages of crypto-card
What are the advantages of having a crypto card instead of a classic card? First, management costs are significantly reduced. The reliability of transactions is very high, because the underlying technology (the famous blockchain) is extremely secure.
But that’s not all. Some crypto-cards come with bonuses or rewards, including cash back on purchases. On Crypto.com as well as on Binance, this cashback can go up to 8% if you are willing to “immobilize” yourself, i.e. keep a certain amount in your account. This cashback is donated in cryptocurrency and therefore helps to grow your portfolio with every purchase. For example, Binance rewards a user with a balance in BNB (its currency).