Crypto exchange Blockchain.com to issue Visa debit cards
Visa ( V ) is opening its payments network to another major crypto firm a day after reporting earnings that topped estimates.
This latest card from Luxembourg-based Blockchain.com, which will be issued through fintech platform Marqeta (MQ), comes with no fees and allows users to earn 1% back in crypto.
The move follows a long-term trend of crypto companies working to make it easier for customers to use their digital asset investments to pay for real-world goods and services.
“We believe access is fundamental to the future of money movement,” Chuy Sheffield, Visa’s head of crypto, said. “We are excited to partner with leading crypto exchanges like Blockchain.com to unlock more ways for consumers to use their crypto for everyday purchases.”
First rolled out to US customers with plans to expand to Europe early next year, Blockchain.com said its customer account-linked debit card already has 50,000 sign-ups for the waiting list.
“It’s really about customer demand,” the firm’s co-founder and CEO Peter Smith told Yahoo Finance. “We’re constantly polling our customers, asking them what kind of features they want next, and the debit card, cards in general, tops the list.”
Earlier this month, rival exchange FTX said it would expand its partnership with Visa by sending debit cards to 40 other countries, starting in Latin America.
Several major brands including AMC, Home Depot, Microsoft, Overstock, Virgin Airlines, Whole Foods and the country of El Salvador accept bitcoin as a form of payment.
Visa already supports cards issued by Coinbase, Binance and many other firms with a total of over 70 partnerships with crypto firms. A report by crypto lender BlockFi found that customers using the card spent a third more than the average US consumer in the first three months after opening the card.
According to their website, Atlanta-based BitPay, one of the largest crypto processing companies, has processed 66,186 transactions in the last 30 days and 422,197 in the last six months. It is still only part of all payment transactions. For context, Visa reported processing 50.9 billion payment transactions for the three-month period ending Sept. 30.
Outside of the crypto crowd, the majority of US consumers have not shown unanimous interest in cryptocurrencies let alone their use as a means of payment given their exchange rate volatility and ease of use.
However, dollar-pegged stablecoins, which can come in a variety of risk variants, can avoid some of the volatility dilemma.
Regulation and public education may also be two other components holding back crypto’s use as payments by US consumers.
According to a poll conducted by the DC-based trade organization Crypto Council for Innovation, half of US voters (52%) expressed a desire for crypto to have more regulation, while 62% admitted that cryptocurrencies are not something they think about much. Only 13% – slightly less than stocks (16%) – said they have cryptocurrency.
Companies that issue debit cards profit from the interchange fee paid by merchants. For debit and credit cards issued by companies under $10 million in assets like Blockchain.com, interchange fees can vary up to 2.5% per transaction, according to Visa.
After Visa and any other partners, debit card companies can take home anywhere from 0.5-1.2%, according to Dan Dolev, a senior fintech analyst at Mizuho Securities.
Blockchain.com’s debit card comes after cryptocurrencies by total market capitalization have sold off by more than half their value from $2.18 trillion in early January to $996 billion, according to Coinmarketcap.
After completing a $490 million Series D fundraising round in March, which valued Blockchain.com as one of the industry’s largest companies, cryptocurrencies plunged in the second quarter. In addition, the firm loaned $270 million in crypto to troubled crypto hedge fund Three Arrows Capital, according to a court document in Three Arrows’ bankruptcy filing.
While it’s inevitable for crypto businesses to admit short-term volatility in revenue, Smith believes the new card offering provides another practical use for crypto that people are looking for.
“In a world where crypto is really successful, people will need more access to the crypto market,” Smith said. “Our customers want to not only invest and save in crypto, they also want access to crypto for everyday use.”
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David Hollerith is a senior reporter at Yahoo Finance covering cryptocurrency and stock markets. Follow him on Twitter at @DsHollers
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