Cryptocurrency Debit Cards With Fiat Conversion Features On The Edge Of A Cliff Says CEO
Crypto Cards On The Edge Of A Cliff Says CEO
Cryptocurrency debit card companies are few and far between, but early entry will help in the long run say companies that are battling for acceptance.
The crypto payment game is riddled with problems, with regulatory hurdles being the main stumbling block. Fiat currency has taken a long time to get properly regulated and still continues to provide challenging problems to authorities. Cryptocurrency, being relatively new, has a long way to go before they gain proper acceptance.
Crypto debit cards have become popular ever since BTC fees have skyrocketed since 2017. This has caused many merchants who were once open to accepting cryptocurrencies such as Bitcoin to withdraw their support. Notable and popular websites such as Twitch, Humble Bundle and Streamlabs among the many companies suddenly stopped accepting any form of cryptocurrency payment.
The Lightning Network is one alternative, but the constant shifting of their timeframe by six months has allowed new companies to bridge the payment gap with debit cards. They find themselves in a precarious position due to multiple jurisdictions with multiple regulatory hurdles. They are also at the whims of card issuers like Mastercard and Visa.
Systematic Differences Between Fiat And Crypto The Key
Pavel Matveev, CEO of Wirex, spoke about the troubles they are facing. He says the key difference is that blockchains are borderless and easy to access from anywhere in the world. Crypto cards, however, have to deal with multiple regulatory geographies and is much more difficult to run. This gives anyone launching cards in multiple countries a tough job that presents multiple challenges. This means that newer entrants are few and far between.
One such challenge is that the company that issues the cards needs regulatory approval as an e-money/money transmitter institution. In some jurisdictions, there is nothing like that, and the lawyers needed to make such compromises work can be prohibitively expensive.
He states that BIN sponsors were hard to come by in the early days of Wirex. A BIN sponsor is a company that is already a member of a card payment network. The largest are VISA and Mastercard. He went on to say that while many were hesitant to work with Wirex due to the involvement of cryptocurrencies, ongoing educational talks have opened many to the idea of partnering with the London based firm.
Merchants Need Education, Many Becoming More Responsive
Paytomat, a company that is readying for an IEO on the Exmo Exchange, provides payment options to merchants to accept more than 18 cryptocurrencies including BTC, BCH, ZEN, and ETH. Paytomat is cognizant of the challenges in trying to fulfill regulatory requirements over 9 widely differing jurisdictions. They have turned their company to work with both Venezuela and South Korea, two vastly different countries with vastly different regulatory frameworks.
They say that once a merchant is shown that they can accept cryptocurrency without making too many changes to their current systems, they are much more open to it. It helps that there is no additional hardware requirement.
Purists Argue Against Half-Measures In Payment Solutions
There are many in the industry who call themselves hard-core purists. They do not feel that a crypto purchase can be considered a real cryptocurrency purchase unless the money goes directly from consumer to the merchant without any intermediary taking their share.
They argue that debit cards that are reloaded with fiat from a crypto wallet do not constitute a moe forward, rather that it is a move backward in the adoption of cryptocurrency in the mainstream.
They point to Polispay and their problem with Mastercard as a perfect example. Polispay, a Mexican company that issues cards that can be preloaded with fiat from a crypto wallet, has been forced to cancel all cards issued outside of Mexico. Mastercard felt that the company did not do enough to satisfy regulatory requirements in the other countries it was operating in.