Why should fintechs,neobanks, and crypto companies offer crypto cards now
Why should fintechs,neobanks, and crypto companies offer crypto cards now
- Striga
- 6 min read
Table of Contents
Today crypto cards are prominent in the market, but it hasn’t always been the case. Today’s market conditions bring great opportunities for crypto wallets and exchanges to launch their own crypto cards.
In this article, we explore how it all started and why it makes sense for you to launch your crypto card program today.
The origins of the crypto bank cards and the first Bitcoin Debit Card
Crypto-backed cards are not exactly new. In fact, the history of crypto cards extends back to at least 2014, when Xapo announced the launch of its Bitcoin Debit Card. Nevertheless, the development of these programs has been challenging and Mastercard and Visa crypto cards didn’t really start to break the chasm into the mainstream until only a couple of years ago.
Why launching a crypto card should matter to you?
Crypto cards emerged early on as an obvious solution to close the loop between the crypto ecosystem and the real world. Since the beginning, crypto cards have offered a great way to allow users to spend their digital assets (such as Bitcoin and Ethereum) in the real world without needing merchants to directly accept them as a payment method. Further, crypto-reward card programs also emerged as an interesting way to on-ramp newbies with lower risk appetite into crypto. As such, crypto cards not only bring great utility for the end customer but also present an interesting opportunity for crypto companies to unlock new sources of revenue and increase user retention.
After a rocky start, better conditions to launch crypto cards today
Unfortunately, in the early days, most crypto card programs didn’t meet great success, shutting down only after a short period of operation or even failing to launch. Nevertheless, more recent projects have seen greater success thanks to changes in the payments market structure, technological developments, and accelerated adoption of cryptocurrencies.
Learnings from the Coinbase Card
Perhaps one of the best examples of this important change is the story of the Coinbase Card (or to be more accurate: the Coinbase Cards). In association with Shift Payments, Coinbase launched its first crypto card (the Shift Card) in 2015 only to see it die for good in 2019. Only a few years later, in 2021, Coinbase came back with a big swing becoming the first cryptocurrency company to be granted a Visa principal membership and launching one of the most successful crypto card programs in the United States.
The comeback of crypto cards
Crypto cards are making a great comeback and present themselves again as a great opportunity for crypto companies to unlock new sources of revenue and increase user retention in an increasingly competitive market. But how and why now?
The current state of crypto bank cards
Visa crypto cards
As part of its new push in crypto, Visa currently supports some of the best-known crypto cards in the world including the Coinbase Visa Debit Cards, the Bitpanda Visa Debit Card, the Fold Visa Debit Card, the Binance Visa Debit Card, the Crypto.com Visa Debit Card, and the BlockFi Visa Debit Card.
Mastercard crypto cards
While it is true that Visa is powering perhaps the crypto cards of the most well-known brands, Mastercard crypto cards have also cashed in a handful of impressive wins. Some of these examples are powering the first ever Bitcoin-Lightning debit card in the world, Lastbit , and powering the world’s first card backed directly by a cryptocurrency credit line in partnership with Nexo.
Beyond Bitcoin pre-paid card issuing
As part of these changes, an industry that started with simple pre-paid Bitcoin cards has evolved significantly and has branched out into more complex and innovative use cases. As such, today both Mastercard and Visa support crypto card programs with physical and virtual card issuing in different modalities, including pre-paid, credit, and debit card issuing. Further, Visa recently started to offer native settlements using a dollar-backed stablecoin, USDC, which can further thrust the industry forward.
Using these tools, today crypto companies across the globe offer a handful of highly differentiated crypto cards, which come either as a virtual crypto card, a physical card, or both, and often support payments via digital wallets (e.g., an Apple Pay or Google Pay debit card). On one hand, there are cards such as the Gemini Crypto Credit Card, a Visa Credit Card that offers rewards in Bitcoin, Ethereum, Solana, Dogecoin, and other top cryptocurrencies. On the other hand, there are also crypto cards such as the Coinbase Card that are mostly focused on allowing users to fund card payments directly with Bitcoin, USDC, Ethereum, and other cryptocurrencies.
The changes that explain why crypto cards are here to stay
During the last decade, there have been a handful of important changes that have helped crypto cards become a great opportunity for crypto companies to embrace. The most important perhaps is the changes in the market structure of the payments industry, in the adoption of cryptocurrencies, and those that have happened at a technological level in the intersection of cryptocurrencies and card networks.
Visa and Mastercard adopt crypto as the core of their strategies
The attitude toward cryptocurrencies from the main players in the payments industry has shifted dramatically over the last 3 years. As close as 2020, for example, the main card networks would generally not allow companies to launch cards that suggested that digital assets were involved directly or indirectly in a card transaction. The approach was conservative to the point of at times not allowing the use of suffixes such as “bit” or of a cryptocurrency logo in the design of a card. Today, both Mastercard and Visa are very bullish about the space and have established crypto cards as one of their strategic pillars. As such, Visa proudly endorses companies such as Crypto.com (for which it has built a dedicated infrastructure). In addition, Mastercard is looking for new ways of pushing the envelope further by exploring ways to expand its network into the Web3 and NFTs space.
Banking as a service and other industry players endorse crypto
Another change that cannot be underestimated in the recent comeback of crypto cards is the accelerated adoption of cryptocurrencies from the announcement of the first Bitcoin Card to date. When CoinDesk covered the planned launch of the Xapo Bitcoin Debit card on June 4, 2014, the market capitalization of the cryptocurrency industry was merely 8.2 US$ billion. At the time of writing, on September 7th, 2022, crypto market capitalization was 972.5 US$ billion (up more than 100x from 2014). This increase in capitalization has translated into more and more individuals participating in the industry. As such, some studies estimate that as many as 320 million people in the world used cryptocurrencies in 2021. This means that there is more money in crypto and more people looking to do more meaningful things with their digital assets.
The rise of crypto banking as a service
The recent support for cryptocurrencies from critical industry players and the increased adoption of crypto have facilitated great technological innovation in the space. Thanks to these developments, crypto companies today can launch card programs with native crypto support easily via developer-friendly API-based platforms that offer white-label digital banking solutions. Instrumental to these developments are companies such as Striga that simplify the launch of crypto card programs significantly by handling relationships with cryptocurrency exchanges, digital assets custodians, banking partners, coordinating the manufacturing of physical cards, dealing with the operational complexities of processing payments, settling the crypto transaction, managing the onboarding of end-users, and taking responsibility of all compliance-related matters leveraging their licenses.
Reasons to consider the launch of a crypto card
Benefits of launching a crypto card
Crypto cards offer cryptocurrency companies a great opportunity to provide more value to their users by allowing them to use their digital assets in the real world or allowing them to earn cryptocurrency without needing to change their spending behavior. As such crypto cards provide great means for crypto companies to increase retention and revenues.
The best way to get your crypto card program started
Today, there is a great appetite from end customers to use crypto cards and there are great solutions such as Striga that crypto companies can use to launch tailor-made crypto cards without needing to take the compliance burden, build relationships with financial institutions, or have any expertise in the crypto or card payments spaces.
Are you interested in learning how to launch your crypto card program with Striga? Reach out.
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