Blockchain payments provider BitPay has launched a Mastercard prepaid card for crypto users in the United States. The BitPay Card enables customers to convert their cryptocurrency into fiat, which can then be loaded onto the card and spent anywhere Mastercard debit is accepted.
Card holders can also withdraw U.S. dollars from ATMs and make online purchases. BitPay CEO Stephen Pair told Cointelegraph that the BitPay Card is specifically targeted at crypto holders, serving as a tool to provide a convenient way to access spending power:
“The real goal of the BitPay Card is to provide users with a convenient way to convert their crypto onto a prepaid card. BitPay is a payments company, therefore we are focused on giving people and companies an easy way to conduct commerce using crypto.”
Prepaid cards are hoping to tap into a whole new market, as recent findings show that 36.5 million people in the U.S. own some sort of cryptocurrency. BitPay’s statistics page also highlights that an average of 98,000 Bitcoin transactions were processed per month during this year.
Mastercard’s vice president of digital partnerships, Tim Montgomery, told Cointelegraph that Mastercard is particularly focused on providing consumers with flexibility and choice when it comes to finances. He said that working with companies like BitPay enables this:
“We’re enabling people to transact in the ways that work best for their individual needs. We will continue to work with fintechs across the globe to accommodate and empower consumer choice, flexibility, and evolving preferences.”
Modern features in a crypto-backed card
Aside from making crypto easier to spend, Pair mentioned the importance of modern features in crypto payment cards, noting that the BitPay Card was designed to have capabilities that users would naturally expect.
Like traditional prepaid cards that function without bank accounts, the BitPay mobile app allows card holders to reload their balances, view transaction history and manage their card settings. The BitPay Card supports Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), XRP and stable coins including USDC (USDC), GUSD, PAX and BUSD.
All funds are made available to cardholders almost instantly, without any conversion fees. BitPay leverages technology from Galileo Financial Technologies, which lets the company use APIs to sell Bitcoin in real-time. Proceeds are then loaded onto the Galileo platform and transactions are processed in fiat through the Mastercard payment rails.
Galileo Financial Technologies senior vice president, Scott Johnson, told Cointelegraph that BitPay is its second crypto prepaid card, noting that the platform also powers Coinzoom.
Pair further pointed out that the BitPay Card features an EMV chip that provides added security and works with contactless-enabled payment systems. Interestingly, he explained that next steps are to integrate Apple Pay and Samsung Pay into the BitPay Card, which would allow users to make payments directly from their smartphones, adding:
“The BitPay Card has all of the modern capabilities users would expect. At the launch, we won’t have everything, but as we move forward we will add capabilities that traditional payment programs offer.”
Same old but different?
Although the BitPay Card boasts impressive features, the company initially launched a payment card in May 2016. However, it was soon discontinued due to customer support issues and limited capabilities, but as Pair noted, the original card was not marketed or promoted heavily.
While this may be, Pair explained that creating a payment card in 2016 helped the company form important relationships with Mastercard and Galileo Financial Technologies. “We might not have had the opportunity to launch the new BitPay Card if it wasn’t for our original product,” Paid said.
It’s also important to mention that a number of other cryptocurrency-backed payment cards have recently come to market. For example, digital payment platform Uphold announced its Mastercard debit card in March. Like the BitPay Card, the Uphold debit card allows U.S. users to convert crypto into fiat that can then be used at any Mastercard-compatible location.
Uphold’s vice president of marketing and communications, Michelle O’Connor, told Cointelegraph that the Uphold card is also equipped with an EMV security chip and pin for stronger authentication. However, the card does not currently support contactless payment. O’Connor further mentioned that Uphold plans to have a debit card ready in the coming months for its Europe-based customers, which will include a contactless payment system.
Crypto company Embily also launched its prepaid card in April, which can be used anywhere Mastercard is accepted. Embily noted that the card is available to users across the globe, not just limited to U.S.-based customers.
Yet while the diversity of offerings provides greater access to crypto users, crypto card issuers remain under great scrutiny due to regulatory issues. A key feature of BitPay is that the company is fully compliant with U.S. regulations. Pair stated in a previous Cointelegraph article that its U.S.-compliant status serves as the main reason merchants chose to work with BitPay over other service providers.
In addition to Uphold and Embily, Coinbase announced in February that they had become a principal member of Visa, allowing the company to provide Visa-based debit cards. Known as the Coinbase Card, this allows customers in the European Union to spend cryptocurrencies.
Making crypto more accessible?
While it’s impressive that a handful of crypto companies are launching payment cards, Pair explained that the goal of the BitPay Card is to provide crypto users with an easy way to tap into their purchasing power. He noted that the card isn’t a product aimed for the mainstream though, as cryptocurrency is still very niche.
That being said, some may question if crypto-backed payment cards will eventually drive mainstream adoption of cryptocurrencies. While regulations and market integrity are major factors for crypto reaching the mainstream, payment solutions that resemble traditional debit and prepaid cards could certainly play a part in the process.
Business development director at The Graph and former Barclays investment banker, Tegan Kline, told Cointelegraph that crypto won’t become mainstream until holding and spending cryptocurrency becomes easier to do than holding and spending fiat:
“Crypto backed debit cards will help with adoption, as they bridge traditional finance, but they will not be the sole driver. Mainstream adoption will come when we have better UX/UI than web2, more seamless payment channels, more transparent taxes and regulation around crypto and better custody solutions.”
Ben Holfeld, a consultant at Accenture Labs, further expressed his opinion that crypto-backed debit or prepaid cards could accelerate usage for legal transactions:
“The exchange of value is one of the top use cases of blockchain technologies, but so far it hasn't reached significant market adoption. I believe prepaid crypto cards for everyday purchases could really help accelerate usage for legal transactions.”