Crypto cards have been viewed as the gateway to the widespread adoption and use of cryptocurrencies. The debit cards came onto the scene a few years back and many crypto users took an interest in them.
When crypto debit cards were first introduced, they seemed to offer cryptocurrency users the ease of use they’d been seeking from cryptocurrencies for a long time. The cards could be used to perform transactions in any setting by a simple tap or touch of the contactless MasterCard. Digital assets could now be spent like any other currency giving cryptocurrency holders an unprecedented kind of convenience as far as the day to day use of their cryptocurrency goes. The ability to link one’s digital wallet to a physical card was bound to offer a solid pathway for the mainstream adoption and use of cryptocurrencies.
The high price of crypto debit cards
After the cards have been in play for a while, it is easy to see and it can be said without a doubt that crypto debit cards are a rip-off. For starters, these cards are expensive to use. They have high transaction fees which, when added up, prove to be quite a substantial amount of money. For example, to pay for something that costs £100, a user is charged £2.50 which will bring the total they pay to £102.50 if they are using Coinbase’s Visa card. The card also has an initial $5 issuance fee and when you compare these numbers with a normal Visa card, it does not add up. Bitpay’s card does not have transaction fees but it comes with a 2% loading fee which is applied every time one loads the card.
These charges defeat the purpose of the cards being the key to the mainstream adoption of cryptocurrency. While they offer user privacy by allowing transactions that one wouldn’t want to appear on their bank statement, for example, the charges crypto debit cards incur will amount to a substantial sum. Many users will want to use them for everyday things such as buying lunch or paying for a movie and when you look at it from that perspective, the charges are too much and the debit cards lose their appeal to that kind of consumer.
The high fees on these cards may come from the fact that the issuing companies also have to pay companies such as MasterCard for the services rendered. This, plus the company itself seeking to make profits, ups the charges that consumers face when they make use of the debit card. Having a company such as MasterCard on board is a necessity for credibility and for guarding against money laundering. People are most likely to trust and use a card because it has been issued by MasterCard. A company like MasterCard is also likely to have strict vetting protocols to prevent money laundering. Although these factors are good, how much one is charged will always be a priority factor and these cards come at a premium.
Crypto debit cards are also offered by very few companies in the industry such as Coinbase. The lack of competition might also be another reason why the charges are so high. In the absence of competition, the current issuers of crypto debit cards can get away with charging a premium. Some crypto companies are working on cheaper payment menthols that can be used for cryptocurrency. Bakkt and Gemini are some of the companies working on payment processing systems for retailers such as Starbucks. If these services come to be and are availed to many retailers, they might be able to force the charges on debit cards down.
While there are a number of players in the industry working on cheaper alternatives, looking at debit cards as the key to the adoption of cryptocurrencies won’t work. Even if the charges are reduced, they could never go down as much as the average consumer would want.