Crypto cards and how to pay with digital currency at the supermarket?

More than 10 years have passed since the appearance of the cryptocurrency, but only in the last 4 years, laws regulating the crypto market have begun to be created. Some countries have begun work on the introduction of digital currency into payment systems, while others, on the contrary, have banned its use in any variations.

Nowadays you won’t surprise anyone by paying for purchases online through a crypto wallet. But some companies have moved forward and developed plastic cards that work with crypto wallets.

Most often, developers from the crypto exchange teams resort to the development of crypto cards. As a rule, when you pay for a purchase, the system converts digital currency into fiat currency at the current exchange rate.

Example:

You had lunch at a cafe for $50 and paid with your crypto card, which is tied to your crypto wallet. You have $250 in any digital currency on your wallet. In this case, the exchange to which the wallet is linked will swap $50 in cryptocurrency for fiat $50 and return them to your card. Next, the restaurant receives this $50 in fiat currency to its account. $200 in digital currency remains on your wallet. The whole process takes a few seconds.

Currency withdrawal at ATMs works on the same principle.

The goal of crypto cards is to introduce the possibilities of cryptocurrency into the real world as much as possible.

Common between cryptocurrency and debit cards:

Round-the-clock access to funds.
Unlike debit cards, crypto cards provide access to both fiat and digital money.
Instant access to your assets. This is achieved due to the fact that the card is linked to an account that belongs to a certain service (crypto exchange).
The cards work on the basis of Visa and MasterCard payment systems, which allows you to use a crypto card anywhere. This will work even if the seller doesn’t accept cryptocurrencies.
Many crypto companies conclude contracts with partners to provide crypto card holders with discounts, cashbacks and free subscriptions to services.

Advantages of cryptocurrency cards:

Constant access to digital money and the ability to use them in everyday life. There is no need to carry out unnecessary actions in the form of exchanging cryptocurrencies for stablecoins and withdrawing it to a bank account.
The absence of intermediaries and third parties. That speeds up, reduces the cost and simplifies working with cryptocurrency.
Difficulties for bailiffs and tax officers in tracking down your assets.
The possibilities of using different crypto and fiat currencies.

Disadvantages of cryptocurrency cards:

When you work with very popular currencies, such as Bitcoin, the duration of the transaction confirmation can increase to 30 minutes.
High market volatility. There is a possibility of a change in the exchange rate, because of which you won’t pay the amount you expected. To minimize the risks of unforeseen situations, experts advise storing a certain amount of digital currency in stablecoins, since their value changes minimally.
Commission for any operations.
A small number of projects that can provide an opportunity to pay with Bitcoin (with other currencies even less) and a small number of banks ready for financing and cooperation respectively.
Deviation from the principle of "Anonymity". Crypto cards are linked to trading exchanges. But when you register on the exchange, you are required to go through the KYC process, where passport data, registration, full name, etc. are collected.
Strict restrictions by law. Visa and MasterCard have limited the issue of cards to the territory of the EU and the USA. In some countries, any use of cryptocurrencies is prohibited by law, or there are strict restrictions.
Taxes. In some countries, a tax fee is charged for the calculation of cryptocurrency. Therefore, before buying a cup of coffee or a car, be sure to read the terms of payment with cryptocurrency in your country.

How to use a cryptocurrency card?

The principle of its operation for the user practically doesn't differ from the work of a debit card and an online bank to which it belongs.

The systems on which crypto cards work. In total, there are three options for the operation of crypto cards:

1. The user orders a card.

After receiving it, activation is required via a mobile application similar to conventional Internet banking.

An approximate such principle of operation has already been described above. During the operation, the exchange acts as an exchanger. Crypto funds are debited from the user's account, converted into fiat currency and sent to the seller's account. The principle is very convenient, because you can pay in stores that do not support cryptocurrency.

Disadvantages: you need to constantly monitor the exchange rate so that you do not pay more money than you need during the exchange.

Examples: Coinbase, Crypto.com

2. The selected amount of cryptocurrency that is in the wallet is first converted to a fiat account (you choose the currency of this account yourself).

Next, the card is linked to the fiat account, after which the card is ready for use.

Example: AdvCash.

3. The application, to which a bitcoin wallet, a fiat account and a card are connected, allows you to store fiat and crypto currencies together.

You can also convert them directly in the application and top up your card from your wallet.However, there are restrictions on the daily withdrawal of funds and their storage on the card. Measures have been taken to combat money laundering.

Examples: Betconix, CryptoPay.

Why do crypto exchanges constantly postpone the release of their crypto cards and why are there so few competitors in this market niche?

1. The first and main difficulty faced by manufacturers is legal issues.

The fact is that not all countries allow the use of cryptocurrencies on their territory. For example, on the territory of Switzerland, Germany, Russia, Algeria, Morocco, in all these countries there is either a complete ban on the circulation of cryptocurrencies, or partial restrictions on its use. China, in turn, has banned banks from conducting any operations with cryptocurrency. But due to the work of individuals, the Chinese crypto market is considered one of the most advanced, there are no restrictions on the purchase or sale of digital currency.

In turn, in Japan, the USA, Canada, Sweden, etc. due to the loyalty of the government, cryptocurrencies and crypto cards are the most popular.

2. The second is high competitiveness. Yes, there are few competitors, but the competitiveness is high.

Due to low support from banks and territorial and legal restrictions, crypto companies literally have to fight for each client by reducing commissions, increasing shares and cashbacks. In turn, this leads to huge losses.

What should I pay attention to when choosing a crypto card?

Characteristics of the card and the package of services.
Availability of a license from a crypto exchange and a payment service.
Prospects of the project.
The availability of the service in your country, or the country that you often visit.

Conclusion

The introduction of crypto cards into everyday life will allow more people to make sure that there is nothing complicated and even more dangerous in cryptocurrency. In the near future, thanks to crypto cards, people will understand that it is possible to use an alternative currency with convenience and comfort.