What is Crypto Debit Cards?
What is Crypto Debit Cards?
Crypto debit cards are payment cards that use crypto as their primary currency. These cards are similar to regular debit cards, although their funding method differs. While regular cards receive funding from bank accounts, crypto debit cards need funding from crypto wallets.
Users of cryptocurrencies have grown tremendously during the past ten years. According to a 2021 report by Triple-a, a blockchain and crypto news channel, there are currently over 320 million cryptocurrency users globally. Other cryptocurrency specialists predict this figure might reach a billion by the end of the year.
This implies that the financial sphere will probably see increased traction for cryptocurrencies. Moreover, more businesses will start accepting cryptocurrency as a form of payment.
The demand for crypto debit cards has surged tremendously with the rise of cryptocurrency users. And to conveniently spend your crypto, you must have a crypto debit card. So far, payment processors and crypto exchanges are the leading crypto card issuers. Some membership platforms, like Club Swan, also issue crypto cards.
Considering signing up for your first crypto debit card? Learn how various crypto debit cards operate and what to look for before you do.
How Crypto cards work
An increase in crypto users has led to increased demand for crypto debit cards. You need a crypto debit card to spend your crypto on day-to-day expenses. Payment processors and cryptocurrency exchanges are the most popular crypto card issuers. However, certain organizations, such as Club Swan, a membership platform, also issue crypto cards.
Do you intend to apply for your first cryptocurrency debit card? Before you choose one, you might want to know how different crypto debit cards work. Here are different processes that different crypto debit cards undergo during the funding.
1. Crypto to fiat
The majority of crypto debit cards fall under this category. Here, you first convert the cryptocurrency in your wallet to fiat. Simply sell the cryptocurrency for fiat on the provider’s site. The platform converts cryptocurrency to money at the current market rate.
Once the trade is successful, it gets deposited into your account. You can now fund your crypto debit card from this account. Better yet, you can pick the type of fiat you want to exchange your cryptocurrency for.
Club Swan platform is a good example of a crypto card company in this category.
2. Crypto to stablecoins to fiat
These kinds of cryptocurrency debit cards enable you to convert your cryptocurrency first into stablecoins. You can then convert the stablecoins to fiat currency at the pegged ratio.
By first converting the crypto to stablecoins, you prevent the effects of the volatile nature of the crypto market.
3. Crypto to stablecoins
Cards in this category have both manual and automatic conversion processes. First, you must manually sell the crypto on the provider’s app for stablecoins. After this, the card controls the rest of the process.
Often, you might believe the merchants receive your payment as stablecoins. However, when processing your payments, the system converts the stablecoins to the pegged fiat, mostly the U.S dollar.
Nine factors to consider when choosing a crypto debit card
There are many essential things to consider when selecting your crypto debit card. When choosing a crypto debit card, your needs and way of life should dictate the type of card to sign up for.
Here are nine factors that will help narrow down to your best crypto debit card.
1. Crypto supported
The majority of crypto card issuer support multiple cryptocurrencies. Also, there is no specific limit to the types of cryptocurrencies a card company can support. Popularly supported cryptocurrencies include Litecoin, Ripple, Ethereum, and Bitcoin.
Some cards can support over 100 cryptocurrencies, while others can support even less. Other card issuers, like Club Swan, can only support nine different cryptocurrencies.
Some cryptocurrency cards also support stablecoins and fiat money in addition to cryptocurrencies. Some types of supported fiat currencies are GBP, USD, and EUR. The more currencies your card can handle, the more flexible and convenient it gets.
So when choosing your crypto debit card, it’s wise to look for one that supports your preferred currencies.
Different cryptocurrency debit cards impose varying fees. Transactional, monthly, and annual fees are some of the often-charged fees.
Withdrawal and deposit fees fall under transaction fees. Also, only a small number of cards charge a deposit fee. In addition to transaction fees, other crypto card issuers impose maintenance and foreign exchange fees.
Most cards that impose these fees utilize them as compensation for payment processing firms. Unfortunately, these fees make it expensive to maintain a crypto debit card.
In short, choosing a crypto debit card with minimum fees for easy maintenance is advisable.
An extremely secure crypto debit card is something that a crypto enthusiast should aim for. There has been a rise in cases of cryptocurrency scams recently. CNBC, a business news network, reported in 2021 that the cryptocurrency market suffered a $14 billion loss. Furthermore, according to a report by Chainalysis, the total value of cryptocurrency lost through cyber scams hit $1.9 billion in the first quarter of 2022.
Fortunately, businesses that issue cryptocurrencies are trying to reduce these scams. Until now, a few well-known cards have included advanced security features in their systems. For instance, most providers’ apps have a security function enabling you to remotely control your crypto card.
Thanks to this security feature, you can change your card’s PIN, freeze it, and even report the card’s loss on the app.
Other crypto card issuers have incorporated security mechanisms like 2-factor authentication, passcodes, and even biometrics in addition to this capability.
Security is an important consideration while selecting your crypto debit card. So it’s wise to check the security measures taken by crypto card issuers before making your final choice.
Different cryptocurrency debit cards offer their consumers different reward programs. Cashback, staking rewards, and referral rewards are a few popular reward programs. To enjoy using your crypto debit card, you would want a crypto card issuer that offers fantastic rewards aligned with your need.
Cashback rewards are the most popular reward system in the crypto market. Most of these cards, unfortunately, only provide cashback incentives for purchasing specific goods and services. Card issuers with different card tires, however, have different cashback rewards. The higher the card tire, the more you’ll likely earn more cashback rewards for your purchases.
Crypto staking is yet another great reward system. The amount of staking rewards you get depends on the length of time you stake and how much you stake. Additionally, it depends on how much the value of cryptocurrencies has grown during the staking period.
Although they are uncommon, referral programs are one the fantastic methods to earn incentives. For instance, the Club Swan program enables you to gain incentives by recommending a new user to the platform. To earn these rewards, the user must register through your unique link. this link takes the user to the Clubswan.com website, where he can access the different cards.
Referring more than three new users means the raise your membership level.
5. Other Perks
Some cryptocurrency debit cards provide their cardholders with amazing benefits and rewards. These incentives range from free subscriptions to fee waivers to discounts.
For instance, Club Swan’s concierge services are services for the exclusive members of the club. Discounts on hotel and travel are among the services you enjoy as an exclusive member.
Other credit cards might include benefits like free subscriptions to Netflix, Amazon Prime, and Spotify. Others even go beyond offering Airbnb discounts, access to airport lounges, and jet partnerships. Therefore, when selecting your crypto card, look for crypto cards that offer benefits that appeal to your needs.
Despite the widespread adoption of cryptocurrencies worldwide, some areas still do not have access to crypto debit cards. In truth, most crypto debit cards can only offer services to a limited number of regions.
Due to geographic limitations, obtaining a card that you believe would suit your needs and lifestyle may be difficult.
Nevertheless, despite the regional limitations, most cards can be used globally, thanks to global processing companies. This implies that you can shop online and offline from anywhere in the world. You can also benefit from simple withdrawals from most ATM points globally.
But be careful that your chosen card doesn’t restrict your present geographic region to avoid disappointment.
7. Virtual Card Availability
Some crypto card providers will provide you with both a physical card and a virtual replica. You can use the virtual card for payments through your smartphone or other smart devices.
Online transactions using virtual crypto cards are smooth and seamless. One benefit of these cards is to avoid security issues related to fraud. This is because you can create different copies of the card and assign them frequent transactions. Additionally, they do away with the inconvenience of constantly carrying your real crypto card and the anxiety associated with losing it.
So, if your business is primarily conducted online, you might want a card provider that issues you with a virtual card on top of the physical one.
8. Support for additional payment methods
In a similar vein, keep an eye out for crypto card providers who accept a variety of payment methods. These payment methods include credit, debit, E-wallets, and bank transfers.
Samsung Pay, Google Pay, Apple Pay, Simplex, and Banxa are a few examples of popularly accepted E.wallets. These payment methods provide additional convenience and flexibility when spending your crypto.
It is wise to look for this attribute before settling on a particular crypto card is wise.
9. Staking Requirements
Crypto card providers employ staking as one of their incentive programs to boost the market’s circulation of cryptocurrencies. As a result of staking, you benefit from staking rewards.
The staking requirements vary amongst crypto card issuers. These specifications include a minimum stake size and minimum stake duration. You have a greater chance of winning big the more and the longer you stake.
The rewards you receive may be impacted by changes in the market value of crypto during the staking period.
In other words, you should consider your needs and lifestyle when opting for a crypto debit card. Thus you must weigh these factors in accordance with their importance while considering them.