The worldwide expansion of digital currencies resulted in the fast development of new supporting instruments of payment such as remittance and merchant services or cryptocurrency-supporting bank cards which are issued in partnership with leading payment networks like MasterCard and VISA. These crypto-friendly bank cards are considered to be the most convenient means for daily crypto payments as they are habitual for users.
Crypto cards allow their owners to make everyday purchases without having to delve into the intricacies of blockchain and other payment processes like wallets and private keys. They work almost identically to traditional bank cards, with the main difference being the automatic conversion of digital currency holdings into fiat when paying for goods and services.
Another major advantage of crypto bank cards is their inherent security, which is directly linked to the underlying blockchain basis that ensures the immutability of records and their full transparency.
Crypto bank cards can also establish an important connection between traditional finances and the world of decentralized assets, allowing their owners to use their holdings to purchase digital items in metaverses and decentralized applications using bank accounts.
The abundance of crypto bank card services available on the market might make it difficult for new users to select a suitable one with holistic functionality. However, keeping in mind certain key factors will simplify the process of selecting a crypto bank card.
Types of Cards
There are several types of bank cards that can be found on the financial market. All of the given types have already found their way into the cryptocurrency industry and are being released by various services.
Crypto Credit cards – These cards rely on the use of loaned funds which are converted into fiat for the spending use of the holder. The funds are granted by the issuing entity in return for a percentage of credit that is accrued either immediately or at the end of a grace period. The client repays the credit in the form of cryptocurrency holdings. It’s worth noting that it is a risky venture, since cryptocurrencies have a tendency of being volatile. Credit cards bear risks, as their excessive use beyond limits often results in penalties. Furthermore, if a client refuses to pay the credit, or the grace period expires, penalties will be applied, and the client may well find him or herself in a financially and legally precarious situation.
Crypto Debit cards – The debit card is the safest and most widespread type of bank card. This card type uses only the funds that a user has on a tethered bank account. These cards are widely used in conjunction with cryptocurrencies, as they are oftentimes tethered to the holder’s cryptocurrency portfolio with available funds converted into fiat with every purchase.
Crypto Prepaid cards – The prepaid card is not linked to any bank account and uses only the funds placed on it by the holder. The limit is restricted by the amount which the user wishes to allocate and can be used for cryptocurrencies as well. Prepaid cryptocurrency bank cards can be loaded with a certain amount of digital currencies that will be deducted with every transaction based on current exchange rates.
The most popular option is the debit card, since it is virtually risk-free, does not entail any charges or credit, and is directly linked to the amount of funds the holder has at their disposal. Credit cards are risky since charges apply. Prepaid cards are an option more suitable for isolated regions that lack a constant connection to a parent bank or digital wallet.
Virtual Cards – In addition to offering an instant gateway to the cryptocurrency wallet with tethering to a legal bank account, crypto-friendly cards can be issued in a virtual format. Such cards provide instant access to funds, both fiat and digital, via a smartphone or watches. Virtual crypto cards also add a layer of security, since they are deprived of risks of physical loss.
Important Factors to Consider
When selecting a crypto bank card, users should take into account several important factors that will determine the availability of the card and the convenience of its use.
First and foremost is the range of supported assets. Not all crypto bank services provide a wide range of supported digital currencies, limiting users to a shortlist of popular coins. Leading global fintech companies like Embily, however, do provide support for Bitcoin, ETH, USDT and other major stablecoins, allowing clients to reliably use their assets and convert them to fiat at favorable and predictable rates.
Another important factor to consider is the partner of the issuing service. The availability of a connection to a global payment network is vital to ensure that the card will be accepted at retail outlets and merchant websites. For example, Embily supports VISA and MasterCard gateways, making it a global service that will be accepted at virtually any merchant outlet or online resource.
The availability of card delivery is another important aspect, which will determine the convenience level of the client. Embily provides free card production and delivery to clients globally.
The commission charges for transactions at merchants and ATMs are vital to ensure the financial feasibility of the crypto bank card’s usage. Some service providers charge commissions for cashouts at ATMs and for transfers. The commission may be as much as 3% per transaction at times. Embily charges 0% commissions for all cashout operations and transfers.
The global reach of the crypto card provider is just as important, ensuring that the client will be able to use their card at any point in the world. This factor pertains to card delivery and service, giving clients the ability to receive assistance from the issuer round-the-clock and use the card for any transaction.
The security of the crypto bank card and the infrastructure of the issuing service are vital factors when selecting a provider. The blockchain industry is known for multiple hacks and personal data leaks. As such, the availability of various security layers is critical for ensuring that cardholders are protected against the potential loss of funds and data. Embily services are fully compliant with the PCI DSS 3.2.1 standard, allowing the company to ensure the integrity of bank card holders’ data and overall infrastructure security.
Availability of exchange operations integrated into the crypto bank card service application interface is also vital for connecting the client to the cryptocurrency market and allowing them to make necessary sales, purchases and exchange operations. Embily provides its clients with a fully functional and intuitive Over-the-Counter exchange integrated into the mobile application.
Some crypto bank card services also require their clients to hold a certain amount of coins or tokens on the card for its continued use. This approach is not convenient for users who rely on their cryptocurrency holdings in daily operations and use the card as a full-fledged debit instrument. The services that apply such a requirement use the clients’ funds for their own operations and for generating passive income from liquidity pools on the market at large, creating potential risks of loss of staked funds. The Embily crypto bank card services does not impose any such requirements for its clients.
Lastly, not all crypto bank card services allow their clients to take advantage of cashback opportunities. The fact of the matter is that debit cards can seldom apply cashback because of the nature of the underlying system of their use that relies on high embedded commissions. The benefits of banks in providing cashback is ensured by the interchange, which is essentially a commission that banks pay each other for making cashless payments. Interchange involves payment systems like VISA and MasterCard, issuing banks, and acquiring banks. The initial source of income for all participants in cashback is the cardholder, who pays a transaction service fee that is included in the price of the purchased goods or services. The seller pays the bank for acquiring, and the acquiring bank sends part of the commission to the service or bank that issued the card. The issuing bank shares the commission with payment systems and the funds received as a result of the interchange are partially returned to the buyer as cashback. Thus, all participants in the chain receive some benefit. Since Embily applies minimum commissions, it cannot incorporate cashback into its debit cards.
Key Takeaways
With the advent of digital currencies and their gradual adoption on par with fiat as a means of payment, the need for convenient carriers has made crypto bank cards a mainstream instrument for participants of the decentralized industry. The variety of crypto bank cards available on the market makes it difficult to select the right one. However, some key factors like service availability, gateway connections, commission fees, security and supported asset lists can help clients determine the service that best suits their needs.
Embily is a global fintech company that provides crypto bank card service to its clients with a hassle-free and straightforward onboarding process. With its zero commissions, VISA and MasterCard support, and compliance with international security standards, Embily is the crypto bank card of choice for bridging the gap between the traditional financial and crypto industries.
