All you need to know about crypto debit cards
Crypto debit cards are cards that enable holders to spend cryptocurrencies. These credit and debit cards function similarly to conventional debit cards. The key distinction between them is how you fund them. You need a crypto wallet to fund your crypto card.
Numerous other cryptocurrencies have emerged on the market since the creation of Bitcoin. Over 20,000 cryptocurrencies are currently available on the market today, claims a survey by Explodingtopics.
Over time, as the number of cryptocurrencies increased, so did the number of crypto users. Over 320 million people are currently using cryptocurrencies, according to a report by the business channel Triple-a. Other cryptocurrency specialists predict this figure might reach a billion by the end of 2022.
Due to increased demand for cryptocurrency, payment and exchange service providers have focused on issuing crypto debit cards. Thanks to this tool, you can spend your crypto in stores that don’t accept crypto.
Although cryptocurrency exchanges are the most popular issuers of crypto cards, other parties also issue these cards. For instance, Club Swan, a membership platform, provides members with metal crypto cards and concierge services.
What are crypto debit cards, and how do they work?
Crypto debit cards are cards you can fund from your cryptocurrency wallet. You can also describe these cards as cards provided by cryptocurrency exchange to enable the spending of crypto in mainstream stores. These cards operate similar to conventional cards even though the funding is from a crypto wallet.
For instance, you can use your crypto card to make online and offline purchases worldwide. Additionally, most ATM points globally allow you to withdraw cash using the card.
Different crypto debit cards function in various ways. Although the merchants receive the payment in fiat, crypto has to undergo various stages for this to happen.
There are three major ways of funding a crypto debit card. These Ways are:
1. Crypto to fiat
This is the most typical method of funding a crypto debit card. You must first convert your cryptocurrency to fiat on the offered platform for these cards. You can trade your cryptocurrency for money at the prevailing market rate on this platform.
Once the crypto-to-fiat exchange is successful, the fiat gets deposited into your account. You may now fund your crypto card from this account and start shopping. Club Swan is an illustration of a card that fits into this category.
2. Crypto to stablecoins to fiat
While funding these cards, you must first convert your crypto into stablecoins. You can then convert the stablecoins to fiat at the pegged ratio when you need to use your card.
By changing your crypto to stablecoins, you protect yourself from the volatile nature of the crypto market. Most stablecoins on the market are anchored to the US dollar at a 1:1 ratio. This implies that the stablecoin’s value will change with that of the US dollar.
3. Crypto to stablecoins
This category works close to that of converting stablecoins to fiat from cryptocurrency. The system runs a part of the operation, making it automatic, and that’s the only difference.
You must manually convert the cryptocurrency to stablecoins for cards in this category. The system then converts the stablecoins to fiat when making purchases with your card. This implies that the merchant receives the payment as fiat but not as stablecoins as you think.
What advantages can crypto debit cards offer?
1. Highly convenient
Before the market introduced cryptocurrency debit cards, cryptocurrency users found it difficult to use their coins for regular expenses. Thanks to these cards, making day-to-day purchases with crypto is extremely easy.
So as a cryptocurrency enthusiast, you might want to add this to your wallet and make your transactional activities easier.
2. Easy to use
Although they may sound complicated, crypto debit cards are rather straightforward. These cards function similarly to ordinary debit cards, as was already described. When you need to pay for your goods and services, you must swipe your card or input your card details.
For extra convenience, several cryptocurrency card providers also provide virtual cards in addition to real cards. If you have a virtual card, you don’t need to carry your physical card around. The virtual cards also enable smooth and error-free online transactions. Additionally, it improves your security by lowering theft and fraud-related cases.
In addition to transactions, UnionPay, MasterCard, and Visa crypto debit cards make it simple to withdraw money from ATMs worldwide.
Some cryptocurrencies take a long to confirm. As a result, most crypto card companies opt to cover these payments. After the confirmation is successful, the card company deducts the amount from your crypto balance.
3. Flexibility
One benefit of having a crypto debit card as a cryptocurrency user is flexibility. Most cryptocurrency card issuing businesses support a variety of coins. Some cards can even more than 100 different cryptocurrencies, while others support just a few.
For instance, the Club Swan platform supports nine different cryptocurrencies. Popularly supported coins include Bitcoin, Ethereum, Litecoin, and Ripple.
In addition to cryptocurrencies, some crypto card providers support stablecoins and even fiat money. EUR, GBP, and USD are a few of the fiat popularly supported fiat currencies. This implies that you can exchange your crypto for any local money while traveling. You avoid the inconvenience of dealing with currency conversions and handling cash whenever traveling.
Other crypto card issuers allow for several payment methods. These payment options include credit, debit, electronic wallets, and bank transfers. Apple Pay, Google Pay, Samsung Pay, Banxa, and Simplex are a few commonly supported E-wallets.
Picking a crypto card supported by UnionPay, Visa, or MasterCard is wise to enable more flexibility.
4. Versatility
Cryptocurrency, compared to fiat currency, may be quite flexible. First, unlike fiat currency, the value of cryptocurrencies is less susceptible to a nation’s economic instability. Also, elements like currency conversion and international transactions can’t affect the market value of crypto.
For instance, the economic crisis has caused a significant value loss for the Venezuelan currency. Due to this economic instability, people have resorted to using hard fiat currencies and Bitcoin. This is because cryptocurrency can readily survive inflation, unlike many fiat currencies.
5. Improved security
Cases of cryptocurrency fraud have dramatically increased recently. In fact, according to CNBC, a business and finance channel, stated that in 2021 crypto cyber scams led to a loss of roughly $14 billion. According to Chaninalysis statistics, crypto scam cases have reached 60% more this year than last year’s first quarter. So far, this has resulted in a loss of $1.9 billion.
Due to these incidents, crypto card providers have concentrated on enhancing their security measures to lower crypto scams.
As an illustration, a few well-known crypto card providers have added remote security to manage their cards. This implies that you can use an app to manage security and other aspects. On this app, you can change your card’s PIN, freeze it and even report it in case of theft or loss.
Apart from the remote security feature, some crypto card companies have included some next-level security measures. These security measures include 2-factor authentication, biometrics, passcodes, and passphrase.
6. Rewards
The majority of crypto card providers give their customers a variety of rewards. Rewards for referrals, cashback, and staking are a few of these incentives.
Cashback rewards are the most popular crypto card rewards among most issuers. You must make purchases using your crypto debit card to receive cashback rewards. Unfortunately, you are only eligible for cashback when you purchase the specified products and services.
There are different cashback rewards for crypto card issuers with different number card tiers. The higher the card tier, the more cashback rewards you earn.
Another way of getting rewards from your crypto card provider is through cryptocurrency staking. Only a few crypto card issuers provide this kind of incentive. To stake, you must adhere to certain staking requirements, such as the minimum stake amount and minimum stake duration. The higher and the longer you stake, the higher the rewards you are likely to earn.
Referral rewards are another great reward system. You must recommend the platform to your family and friends to receive referral bonuses.
The Club Swan platform is a fantastic illustration of a platform that provides referral rewards. You can make up to 20% of your referral’s membership price with this platform. The more referrals you recommend, the more likely you will move to a higher membership level.
7. Additional perks
Some crypto card issuers go over and above to provide some incredible benefits in addition to incentives. These benefits can take the form of discounts, fee waivers, or even cost-free subscriptions.
For instance, the club swan concierge services are some benefits exclusive club members enjoy. These services include discounts on travel and leisure activities as well.
Meanwhile, others provide a free subscription to well-known streaming platforms like Spotify, Amazon Prime, and Netflix. There are perks like access to airport lounges, jet partnerships, and even discounts for your Airbnb.
What are the crypto debit cards’ restrictions?
Although they have many advantages, crypto debit cards have some restrictions. These restrictions consist of:
1. Possibility of owning fees
You must sell your cryptocurrency to fund your crypto debit card. For any loss or gain in this step, you get taxed.
The IRS (Internal Revenue Service) considers cryptocurrency as a capital asset. This places cryptocurrency in the same class as bonds and stocks. This means you must pay tax to the IRs on any crypto gains.
The amount of crypto you hold and how long you retain it determines the amount of crypto gain tax you pay.
2. Geographical restrictions
Although crypto has gained tremendous traction worldwide, most card issuers can only ship them to particular areas. Therefore, you might not get a crypto card that you think will meet your needs.
This means you might be forced to get a card available for your region even though it doesn’t meet all your needs.
3. The potential for hefty fees
Some cryptocurrency debit cards also impose fees in addition to transactional, monthly, and annual fees. Due to this, owning a card might become quite costly.
These extra fees include a currency conversion fee and an inactivity fee.
4. It is expensive to fund a card with a different crypto wallet
It’s really difficult to fund one card from a different account of a different card issuer. Additionally, moving cryptocurrency between accounts is pretty expensive.
