Bitcoin debit cards help bridge the gap between cryptocurrency and the real world, making it possible to buy just about anything with your crypto assets.
This guide takes a closer look at how cryptocurrency debit cards work and how you can compare the available options to find a card that’s right for your needs.
Important updateIn January 2018, Visa sent shockwaves through the crypto world when it announced that it had severed ties with WaveCrest, a company which at the time issued some of the most popular cryptocurrency debit cards around the world. This forced several bitcoin debit card companies to look for alternative arrangements and reduced the range of debit card options available to crypto enthusiasts. If you’re considering applying for a crypto debit card, be aware that this is a market sector where regulatory changes and decisions from major payment networks can have a quick and significant impact.
Compare bitcoin debit and credit cards at a glance
If you want to know how to choose the best bitcoin debit card for your needs, you’ll need to thoroughly research the cards available and compare the features they have to offer.
The full breakdown: Features to consider when choosing your bitcoin debit card
|Things to consider|
|Type of card||Does the provider offer a physical bitcoin debit card, a virtual bitcoin debit card or both? Not only will this affect where you can use the card, for example, you can’t use a virtual card at an ATM, but also the fees that apply. If a provider offers both physical and virtual cards, make sure you’re comparing fees and features for the type of card you want.|
|Prepaid vs non-prepaid cards||Next, check whether the card is prepaid or not. Prepaid cards allow you to load cryptocurrency onto your card and have it converted to fiat currency straight away, so you have a balance of AUD ready to go. Meanwhile, non-prepaid cards are connected to a bitcoin wallet, allowing your bitcoin to be converted to fiat currency on the spot when you make a purchase.|
|Supported currencies||Check which fiat currencies the card supports. Only a quite limited range of cards allow you to convert your crypto to AUD, with USD and EUR much more widely accepted. In terms of cryptocurrencies, most cards accept bitcoin only, but some also allow you to top up your balance using other digital currencies.|
|Card issuance cost||Most bitcoin debit cards don’t come free, so you’ll need to check how much the provider charges for ordering, delivering and activating your card. Prices vary depending on whether you choose a plastic or virtual card, though plastic cards usually cost more upfront and can be $50 or more in some cases.|
|Loading fees||Many providers will charge a fee when you load your card with crypto coins or tokens. This may be a flat fee or a percentage of your transaction amount, so check the fine print to find out how much it’ll cost you.|
|Additional fees||Next, make sure you’re aware of any other fees that apply to the card. These may include:|
|Exchange rate||What exchange rate will you get when the provider converts your crypto into fiat currency? Check to see how the provider calculates its exchange rates and how it compares to market rates. Please note that crypto debit card exchange rates will typically be noticeably lower than mid-market rates.|
|App available?||Does the debit card also come with a linked smartphone app and wallet you can use to manage your funds? For example, you may be able to use the app to check your balance, top up your card and convert funds from one currency to another.Also check whether you need to use the wallet offered by the card provider or whether you have the option of linking your card to your own secure wallet.|
|Transaction limits||Most card providers impose limits on the amount you can spend on your card. Make sure you check for:|
|Other loading methods||Some card providers will require you to already own cryptocurrency which you can then use to load your card. However, many providers allow you to purchase cryptocurrency directly through their app/wallet platform. If this is the case, check which payment methods you can use to exchange your fiat currency for digital coins, such as bank transfer, BPAY and credit or debit card payment.|
|Payment network||Check which payment network the crypto debit card is issued on, such as Visa or Mastercard. This will help you work out exactly where the card is accepted all around the world.|
|Verification requirements||Find out what sort of personal details and ID you’ll need to provide when you sign up for a card. Will completing an ID verification process allow you to access higher transaction limits? Is it possible to register anonymously if you wish?|
|Company background||Finally, don’t forget to take some time to consider the background of the company behind the card. How long have they been in business? Where are they based? What sort of reputation do they have? Has their card been linked to any scams?|
By comparing cards based on the above factors, you’ll be well placed to decide which cryptocurrency debit card is the right fit for you.Back to top
How do bitcoin debit and credit cards work?
The 101 on bitcoin debit and credit cards
A bitcoin debit card is a debit card linked to your cryptocurrency balance. These cards aim to make it quick and easy to spend your crypto coins in the real world, allowing you to pay with digital currency anywhere that regular debit and credit cards are accepted and to use your crypto balance to withdraw cash at an ATM. There are several crypto-friendly stores, retailers and ATMs in Australia where you can use your bitcoin debit card.
How they work is actually quite simple:
- Prepaid cards allow you to load your card with coins from your crypto wallet, which are automatically converted into your fiat currency of choice (ie Australian dollars) so that you have an AUD balance on your card ready to spend.
- Non-prepaid cards are linked to your bitcoin wallet so that whenever you swipe them at a payment terminal or enter your card details to make an online payment, the card provider converts your digital coins into fiat currency at the current exchange rate to complete the transaction.
Crypto debit cards usually run on existing card networks like Visa, Mastercard or EFTPOS and can be used anywhere in the world where those cards are accepted. Bitcoin is far and away the most widely supported cryptocurrency across debit card providers, but some providers around the world also allow you to load your card using other currencies, such as Ethereum and Litecoin.
Finally, make sure you’re aware that cryptocurrency debit cards come in two forms:
- Physical cards that you can carry around in your wallet, swipe at payment terminals and use at ATMs
- Virtual cards that allow you to enter your card details for online purchases
How would I use a bitcoin debit card?
Buying a GoPro with cryptocurrencyJim wants to buy a new GoPro camera from his local electronics store. But thanks to a spate of unexpected bills, Jim is a little short of cash at the moment and doesn’t have the $500 necessary to complete the purchase.
However, Jim does have a crypto wallet where he is storing 5.43 BTC, so he decides to buy the camera with some of his bitcoin balance. He decides the easiest way to do that is to use a bitcoin debit card. How does he go about doing this?
Jim signs up for a physical bitcoin debit card that allows him to convert his BTC into AUD and pay at any EFTPOS terminal around the country. Once his card arrives, Jim uses the card provider’s app to load 0.2 BTC onto his card. The provider converts his BTC into AUD, leaving Jim with a balance of just under $2,000 on his card.
Jim then uses the card to pay for his GoPro at the local electronics store. All he has to do is swipe the card at the EFTPOS payment terminal and enter his PIN.
What are the benefits and risks?
If you’re considering getting a cryptocurrency debit card, make sure you consider the pros and cons first.
Benefits of bitcoin debit cards
- Convenient access to your crypto coins
- Allow you to spend your cryptocurrency in the real world
- A quick and easy way to convert your crypto into fiat currency
Risks of bitcoin debit cards
- Rates and fees vary between cards but can significantly increase costs when spending bitcoin
- Limited card options available
- Regulatory uncertainty as some banks and payment networks have imposed restrictions on these types of cards
- Centralisation, you need to entrust control of your digital currency to a third party
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